PM announces measures to yield revenue

A number of tax measures, expected to yield an additional $20 million in revenue, were announced yesterday by Prime Minister Dr Ralph Gonsalves, as he delivered the 2016 Budget address.

The Prime Minister said in order to finance the Government’s ambitious plans for growth, more revenue is needed.{{more}} In this regard, emphasis will be placed on an increased revenue intake, by reducing tax exemptions and concessions and improving tax administration and compliance.

A number of items have therefore been removed from the value added tax (VAT) exemption list and the zero-rated listing, with effect from May 1, 2016.

The zero-rated items which will be made taxable are: (i) packaged rice for retail sale (ii) whole chicken and chicken parts (except chicken back, necks and wings) (iii) table and cooking butter (iv) brown sugar.

Exempted items to be made taxable (i) lentil and pigeon peas (ii) cooking oils (except coconut oils) (iii) shortenings (iv) salt (v) yeast (vi) baking powder.

This revenue measure is estimated to yield $8 million per annum.

The Excise tax on alcoholic and some other beverages will also be increased.

Gonsalves, who is also Minister of Finance, said the additional revenue from the taxes on brown sugar and some beverages will help to defray the cost of the Government’s initiative to treat diabetic ulcers with the drug Herboprot-P, which is approximately $30,000 per person.

Property taxes on commercial properties have also been increased, the proceeds from which will go towards the clean-up of Kingstown.

“At the time of introduction of the new property tax system, a concessionary rate of 0.06 per cent was instituted for all commercial properties. At that time I indicated that this was a temporary arrangement to give businesses time to adjust to the new system.

“I therefore propose to increase the rate on commercial properties from the present 0.06 per cent to the standard rate of 0.08 per cent. The new rate will come into effect from the current tax year and will yield an estimated $300,000 per annum, most of which will accrue to the Kingstown Town Board. As you are aware, a priority of the Government in 2016 is the cleaning-up of Kingstown and improving its appearance. More resources are thus required.”

Announcing increaced fees for drivers’ licences and motor vehicle licences, the Prime Minister said the additional revenue will be used to assist in defraying the costs for the use and regulation of traffic on the roads.

In 2015, there were 25 fatal accidents on the roads of St Vincent and the Grenadines caused by motor vehicles, a state of affairs Gonsalves described as “wholly unacceptable.”

“There is too much carelessness and recklessness on the roads; there is insufficient consideration by too many motorists for other road users. There are too many defective vehicles on the road; there are too many unlicensed drivers, unlicensed and uninsured vehicles on the road….”

Gonsalves said he proposed to increase motor and drivers’ licences by approximately 25 per cent for the various categories, which is expected to yield an estimated $3.0 million in revenue, which will be used to assist in defraying the costs for the use and regulation of traffic on the roads.

The cost of a one-year driving permit is now $100, up from $75; a three-year permit is $275, up from $200, while a five-year permit is now $425, up from $325. A learner’s permit has increased from $65 to $100, while registration and change of ownership has been increased by $50 to $150. The fee for a personalized number plate is now $2,500, up from $1,500.

A vehicle surcharge on vehicles imported into the country that are older than four years will be imposed.

“As is well-known, imported vehicles beyond a particular age, create environmental challenges. Some countries in CARICOM impose bans on the importation of vehicles older than four years. We do not, but we impose a special surcharge on them. The surcharge payable on imported vehicles older than four years was last adjusted in 2008. I now propose to increase the charge by approximately 15 per cent for each category…”

The revenue yield from this measure is estimated at $0.5 million per annum.

Fees payable for Residence Permits, Work Permits and Citizenship, Gun Licenses and Land Taxes will also be increased.

“The rates of land tax have not been adjusted for over 20 years, despite the significant appreciation in land prices since then,” the Prime Minister said.

The licence fee for shot guns will increase from $125 to $200; for revolvers and pistols from $250 to $500; for rifles from $250 to $500; for firearms for watchmen and servants from $350 to $500; for dealers in firearms from $1,000 to $1,500; and a fee of $100 has been introduced for persons applying for a gun licence.

The estimated revenue yield from these composite measures is $0.75 million per annum.

The Prime Minister also announced the imposition of a levy of two per cent on mobile telephone calls and on international calls to be paid directly into the Zero Hunger Trust Fund, in accordance with a specific statute law. This levy is estimated to raise $2.7 million annually.