New tax will be introduced in the House on Friday

It is sure be one of the highlights at tomorrow’s meeting of the House of Representatives at the National Assembly in Belmopan: the G.S.T. or Goods and Services Tax. By the Minister of State in the Ministry of Finance Jose Coye’s own admission, the G.S.T. is VAT, Valued Added Tax, just with another name. This afternoon, Coye broke down the difference between the current sales tax and the G.S.T.

Jose Coye, Minister of State, Ministry of Finance
?The Sales Tax is a hybrid of being tax at the entry point only. It stops there, especially with imports that in themselves become consumption. And then certain goods, especially domestically produced goods and services, it goes to the end of the distribution chain. So you have different base. You have a base at the beginning of the chain for some goods, you have a base at the end of the chain, and then you have some in between. What the G.S.T. will do will remove all those distortions; it takes everything to the end. The base will all be at the end of the distribution chain, that?s what the G.S.T. does. And it removes all the distortions and inequities in the system, the cascading, the taxes and taxes. The Sales Tax is causing a lot of distortion in the productive sector especially. You?re paying tax on tax, you?re output might be exempted but the input is being taxed, so we are bringing it to?by the way, it has been accepted by a hundred and thirty countries in the world and only five of them had abolished it. And of the five three went back and the other two are on their way, Belize and Grenada.?

The Minister declined to offer what the percentage of the G.S.T. will be. The new tax is scheduled to be implemented at the start of the new financial year in April 2006.