The Government is seeking to raise an additional $15.9 billion in revenue over the 2013/2014 fiscal year.
The tax package was announced by Minister of Finance and Planning, Dr. the Hon. Peter Phillips yesterday (February 12), during the debate on the first Supplementary Estimates for the fiscal year, in the House of Representatives.
Dr. Phillips noted that the tax package was necessary for the country to secure an agreement with the International Monetary Fund (IMF), access funding from other international institutions, and ensure that the country can meet its obligations.
“This…is what we need to do to be able to unlock funds that exist in the Inter-American Development Bank (IDB), in the European Union (EU), grant funds included. It is what is required to ensure that we meet our obligations to the domestic bond holders, who we are asking to sacrifice because we cannot ask them to sacrifice, to take the hit on their interest charges and not put the country in a way to make good on its obligations,” he stated.
The Minister announced a range of new measures related to the General Consumption Tax (GCT), which will come into effect on March 1 and are in keeping with the Government’s commitment to broadening the tax base.
These entail: inclusion of the telephone call tax as part of the GCT base to yield $1.3 billion; inclusion of all fees and taxes paid at the ports to bring in another $1.5 billion; and amendment to the GCT Act to account for GCT on the face value of prepaid vouchers/ airtime, which is expected to yield $0.2 billion.
Dr. Phillips further announced an increase in income tax on dividends payable to residents from five per cent to 15 per cent, which is expected to yield $0.8 billion, and imposition of surtax of five per cent on the taxable income of large unregulated companies, which is expected to yield $1.2 billion. These measures take effective on April 1.
In an effort to address the continued shortfall being experienced by the Student Loan Bureau (SLB), Dr. Phillips told the House that an adjustment will be made to the Education Tax.
The adjustment, which also takes effect on April 1, will see employers’ contribution increasing by 0.5 percent, and for employees/self employed persons by 0.25 per cent. This is expected to yield $2.8 billion. Minimum wage earners and those below the Income Tax threshold will not be required to pay the increased Education Tax, the Minister informed.
There will also be an application of a Customs Administration Fee on all imports, except for charitable organisations and the bauxite sector. This is expected to yield $1.2 billion and will be implemented on April 1.
Also April 1, local stamp duty and transfer tax on properties will go up by four per cent and five per cent, respectively, to bring in $2 billion; while the Government is looking to raise $1.5 billion from increases in fees for betting, gaming and lotteries. There will also be a reform of the property tax rate regime, which is expected to yield $3.4 billion.
In the meantime, the National Housing Trust (NHT) will be required to make a contribution of $11 billion per year, over the life of the new agreement with the IMF.
Dr. Phillips said this measure is part of the fiscal consolidation efforts and will not result in any change in the mandate of the NHT to provide affordable housing.