Business
No new taxes in Barbados budget
But the increase in VAT and other measures from the 2010 Budget have not been rolled back either. Tourism and business are among the sectors that have been promised incentives.
Barbadians were given a tax ease in the 2011 Budget delivered yesterday, with no new taxes imposed and an adjustment to land tax bands that will result in some property owners paying nothing at all.
The increase in VAT from 15 to 17.5 percent, an 18-month imposition on allowances, a 50 percent increase in the excise tax on gasoline, as well as a rise in bus fares, all instituted in the 2010 Budget, will remain in place, however.
In presenting the US$1.65 billion budget to Parliament yesterday evening, Finance Minister Chris Sinckler (pictured), also outlined incentives for the tourism and business sectors.
Property owners were the first to hear about tax relief, as Sinckler proposed that, effective this year, the existing tax bands should be adjusted while maintaining the current rate structure.
“For residential property, at present the first US$75,000 is exempted from tax. We propose to raise that to US$95,000. That, of course, will mean that an additional set of people will now not be paying taxes,” he told Parliament.
A rate of 0.1 percent that is currently applied up to the next US$200,000 in value will go up to US$250,000. A rate of 0.45 percent will be applied on properties valued up to US$625,000, up from US$500,000; and a rate of 0.75 percent will be applied to all properties in excess of US$625,000, which is an increase from the previous value of US$500,000.
Government, however, will be getting tough on people who try to avoid paying the required income tax. The fee for late filing will jump from US$50 to US$250.
“Some of course think this should be more but we are doing this not for revenue generation purposes but to increase the level of compliance with the Income Tax Act with respect to filing, whether or not a tax refund is due,” the Finance Minister said.
Rewards for energy efficiency
Incentives have also been proposed for homeowners and businesses to be more energy efficient. Currently, they can benefit up to a maximum of US$3,500 every year through Income Tax deductions in respect of energy audits, renewable energy and energy efficiency retrofits.
Minister Sinckler said that, with effect from the current tax year, the energy conservation and renewable energy deduction will double from US$2,500 to US$5,000 per year for individuals and US$12,500 per year for registered small businesses.
Meantime, in an attempt to increase the use of alternative energy sources, duty free concessions offered to the hotel and manufacturing sectors on the importation of electric water heaters will be discontinued from January next year.
The Finance Minister also announced relief from the increasingly high cost of fuel for the most vulnerable groups in society such as the elderly, disabled and the unemployed indigent. They will receive a one-off energy grant.
That initiative will commence on October 1 and will be to a maximum of US$2.5 million.
Sinckler said that in an effort to facilitate the promotion of renewable energy and energy efficiency, Government will be putting the necessary enabling environment in place.
“In this regard within the next few weeks, draft renewable energy and energy efficiency policies will be submitted to the Cabinet along with proposals for the amendment of the relevant legislation,” he said.
“It is the Government’s intention to have draft legislation in respect of the renewable energy policy within the next few months to facilitate the generation of electricity by renewable energy systems and the sale of electricity to the grid.”
“This comprehensive programme will create an institutional, policy and operational framework that will set the appropriate incentives to generate substantial energy savings, reduce the cost of electricity to households and businesses and contribute to a reduction of oil imports and hence liberate funds for other purposes,” he added.
It is projected that Barbados will be able to reduce oil imports cumulative costs over the next 20 years from US$2.648 billion to US$1.978 billion, as a result.
Some players in the tourism sector have also been given a tax ease. Taxes paid on remittances to global insurers, by businesses that offer attractions and tours to travelers in the cruise industry, will be eliminated.
Economy to grow
Minister Sinckler acknowledged that the measures and programmes outlined in the Budget would not please everybody, but said the country’s constrained fiscal and other circumstances did not allow that luxury.
“What we do know, however, is that Barbados is the sum total of its parts and achieving the lofty objectives of advanced status in the shortest possible time will not be achieved if we do not join hands to work together as Team Barbados,” he said.
“And as a great cricketing nation, we know that working as a team means combining resources just as it means each sacrificing self for the advancement of the team. This Budget is but yet another installment in the Plan of Team Barbados to bring us out of the recession even better than we went in. The plan is working.”
The Finance Minister said that overall economic growth stood at 2.1 percent at the end of the first half of 2011, “a healthy improvement to the 0.5 percent decline at the end of the second quarter 2010.”
It is projected that the economy will grow between 2 and 2.5 percent this year.
Sinckler said that increase is based on the apparent recovery in tourism over the last year. The industry is expected to grow in real terms by more than 2 percent in 2011.
Source: Caribbean360