Posted on

Taxes coming on lottery winnings under $500

Taxes coming on lottery winnings under $500

Share

Lottery winnings of $500 or less will no longer be exempted from tax.This was among the fiscal measures for 2013 Prime Minister Dr Ralph Gonsalves announced in his Budget Address yesterday.{{more}}

There will also be a shift to a valuation and rating system on property tax and an increase in the excise tax on alcoholic beverages, except on strong rum.

Gonsalves, who is also Minister of Finance, said that over the last few years his government had implemented a successful tax reform and modernization programme, which was a major component of the fiscal reform programme.

“In the Inland Revenue Department improvements have been realized in capacity building in the areas of audit, collections, enforcement and corporate strategic planning,” Gonsalves said.

He further said that even in 2013 the IRD had been tasked with several reform initiatives.

These include the completion of the introduction of the market value system for the property tax and introduction of new arrangements for vehicle and driver’s license.

There will also be a continuation of the programme for collection of arrears, particularly the larger cases and miscellaneous amendments to the Income Tax Act to correct some deficiencies and inconsistencies.

The new valuation and rating system comes into effect this month, after the Bill was passed in the House last year.

“The tax was levied at a rate of 0.08 per cent on real property except rural land, which will continue to be taxed at various rates per acre,” Gonsalves said.

Properties valued at $50,000 and below will pay a flat rate of $10 per annum.

“Our analysis has shown that there are 10,785 properties below the $50,000 threshold, at 0.08 per cent some $213,193 of tax is associated with these properties which are an average of $19.77,” he explained.

He said further that the flat tax of $10 per annum represented a 50 per cent reduction for these properties.

A reduced rate of 0.06 per cent applies to commercial properties and a rate of 0.04 per cent applies to hotels, tourism related development and factories used for manufacturing purposes.

Gonsalves also outlined a number of measures to be implemented at the Customs and Excise Department as that entity continues with the migration from ASYCUDA to ASYCUDA++ and the development of a comprehensive strategic plan to guide future reform and operational effort.

Consumers of alcoholic beverages will have to dig deeper into their pockets, as the prime minister announced a further increase in the Excise Duty on alcoholic beverages.

But locally produced Strong Rum will be exempted and Gonsalves said the tax rate on this category was already higher than on the other categories.

“This increase is necessary in order to assist government in meeting the cost of running the annual carnival, which has been rapidly increasing in recent years. The annual cost now exceeds $2.7 million, of which $1.2 million is contributed by the National Lottery and an additional $1.5 million by the central government,” he said.

This new increase was expected to generate an estimated $1 million per annum in additional revenue.

In 2011, the government made some modest increases to the fees charged by the High Court Registry of documents.

But the fees collected from the department, Gonsalves said, cover only a small percentage of the cost of operating the department.

As of March 1, a new fee structure will be implemented and is expected to raise $420,000.

Expected increases in other fees include charges by the Commercial and Intellectual Property Office; Immigration fees for citizenship, residence and renunciation, including a fee structure to support the introduction of an “Express Service” for new and replacement passports and charges for advertising signs at E.T. Joshua and other airports.

Gonsalves also announced that in 2008 the Economic Partnership Agreement was signed between CARIFORUM and the European Union, which established a World Trade Organisation compatible free trade area for goods and services.

As a consequence, immediate duty free and quota free European market access was granted to exports originating from CARIFORUM states.

Each CARIFORUM state was expected to undertake liberalisation in a manner that confirms to a stipulated timetable.

“In St Vincent and the Grenadines there would be a three-stage phased method of implementation.”

The first of the three phases is expected to commence early February 2013.

This gradual removal of duties on goods originating from the EU would result in a loss of revenue collected by central government, Gonsalves said, with initial estimates at $2.7 million from 2013 to 2017. (DD)

LAST NEWS