BUDGET 2010: Sales Tax Going Up 25%! Increase on Electricity tax!
The fiscal year closes at the end of March and the budget’s performance for 2009 to 2010 was poor, and the coming year promises to bring new and additional taxes. Prime Minister Dean Barrow presented the Budget on Monday, March 15 and called it “Recovery Today, Prosperity Tomorrow”.
Hardest hit is an almost 5% business tax imposed on electricity, meaning B.E.L., which soon afterwards caused a blackout, and a 2.5% increase in sales tax, which means that coupled with the 2% environmental tax, consumers would now be spending 14.5% in taxes at the stores.
The Barrow administration expects GDP (Gross Domestic Product) to grow by 1.5% over the fiscal year. So how will the Barrow administration fill the 61million dollar hole in the budget? …By increasing taxes of course! According to Barrow, if the gap in the budget wasn’t closed through taxes, the overall deficit would have increased to -4.2% of GDP. And which taxes are expected to increase? Everything from your electricity bill to General Sales Tax, even the Export Processing Zones will suffer from increased taxation.
The new tax measures are:
* Increase Business Tax for the supply of Electricity Services from 1.75% to 6.5%. This is only for the suppliers of electricity and this is projected to yield an additional 10 million dollars. This tax or this increase in their business tax is based on the profitability and the perceived ability to pay. It is still far less than such suppliers would be paying if they were under an Income Tax on Profits regime, since according to the PUC, that profits in the sector continue to be bountiful.
* Excise Tax on Locally Produced Crude Oil at a rate of $1.00 per barrel – projected to yield $1.8 million per annum. This is to provide additional revenue to government and is done especially in view of the increased road maintenance on the Western and Hummingbird Highways necessitated by the transport of the crude oil to the port at Big Creek.
* Levy a Social Fee at a rate of 5% on the value of all Goods and Services imported into Export Processing Zones. This should yield a further $3.5 million. It is felt that a small fee to offset the duty free status of the EPZs would not threaten their operations or their international competitiveness.
* Press the collection of Outstanding Tax Arrears and this is expected to yield $4.2 million. One is some still outstanding taxes never paid by the previous owners of B.T.L.—news owners of Speednet. The other has to do with land – The idea now is still only to collect at the old, easier rates but to use all available processes to collect at those rates.
* Increase the rate of the General Sales Tax from 10.0% to 12.5 %. This will yield $42.0 million. “We have had no choice in this matter,” comment Pm Barrow. “But even as we raise the GST, we are mindful of our promise to protect the poor and the local income earners. Therefore we are also proposing a slew of tax relief measures, designed to insulate the most vulnerable. The GST is a consumption tax and so we want to do two things: the first is to ensure that the absolutely essential items and in particular food stuff will actually see a drop in prices notwithstanding the generalized GST increase. In other words, basic ingredients for the average Belizean family’s everyday meals should now see a price drop after this budget.”
* The removal of import duties on a wide range of food items, powder laundry detergents, agricultural equipment and machinery including tractor parts, agricultural packaging materials, and basic school supplies.
At $42 million in increased proceeds, there’s no mistaking that the general sales tax will provide the majority of the additional revenue to bridge the financing gap. (News Source: Channel 5 and News 7)
