P.M. and business people talk taxes

He is the Minister of Finance but until today Prime Minister Manuel Esquivel had kept a low public profile on the new tax that he plans to impose on business people. But in a marathon meeting held this morning at the Biltmore, the P.M. broke his silence and stood toe to toe with some of his harshest critics. News Five’s Stewart Krohn was on hand at ringside.

The meeting started on a controversial note when the gathering was informed that the television news cameras — with the glaring exception of those belonging to the Government — would have to be removed during the question and answer section. While the authorities quickly backed down on that issue the Prime Minister, during the next three hours of sometimes acrimonious debate, made it clear that while there would be some adjustments to the proposed legislation the fundamentals were here to stay.

Manuel Esquivel, Prime Minister

“We feel that this bill addresses a fundamental, philosophical position of the Government with regard to taxation. That is why it addresses both personal income tax as well as business tax and that is that a taxation which is on profits, is taxation which is an incentive to minimize profits.”

Fairness was a recurring theme in the Prime Minister’s explanations and he kept reminding the audience that the new tax would be revenue neutral, meaning that it would merely seek to replace the money lost to the treasury by the lowering of personal income tax and the abolition of corporate income tax. Out of fifty eight million dollars in collectible income taxes he said that workers were now paying twenty eight million – a figure he found too high. The burden, he said, would be shifted to the shoulders of business people who were now paying little or no income taxes.

While the P.M.’s theory had a nice ring to it many of the questions came from those businesses who faced the simple reality that they were not paying taxes because they were not making any money. After all the testimony from accountants, executives and other experts it was left to Jamaican born businessman Percy Dyer to fire off some shots from the heart.

Percy Dyer, United Services Ltd.

“It is a very short space of time from today the twelfth of June to July one and of all the valid concerns raised by all various members of this gathering I cannot see how that all those concerns can be satisfactorily addressed between now and July one. Is July one a must date that the hammer must fall?

Please get your Cabinet to consider, reconsider. This tax is not fair and if carried out in its present form you’re going to see widespread unemployment in this country. There’s no question about that.”

While Mr. Esquivel may have been charmed, he was not swayed. The tax will start on July first, he said, but all was not lost.

Manuel Esquivel

“Whether we had ’til July first or we had ’til 2010 all of the concerns would not be addressed and there is no promise that all of the concerns will be address. What will be addressed are those concerns which are considered to be concerns which deserve to be addressed and which have made a convincing case that they should be addressed. And is there time for us to do that? Yes, we have started now already over two weeks listening to these concerns and they are being addressed through the House Committee who will be making their recommendations. So, the simple answer to that is, yes, I believe there is time.”

But time was clearly running out for those who were hoping for major concessions. A few who did get a break were thankful — particularly operators in the Corozal free zone and other export processing zones, as they will be exempted from the tax. It was also made clear that credit unions will not be taxed, while B.T.L., probably the last company that needs a tax break, was told that the proposed rate of twenty five percent may have been too high — that the Government only meant to make the new tax collection equal that the giant monopoly paid under the old system. Another winner was the insurance industry, which learned that its four percent levy replaced and was not in addition to the present two and a half percent tax on premiums. But that was about it in the way of gifts. A number of Mennonite farmers made a case for relief — one poultry man predicting that the new tax would mean a twenty cent per pound increase in the price of chicken — but the Prime Minister did not seem convinced. After the session he agreed to speak to the press.

Q: “Did you anticipate that the opposition to this new business tax would be as large as it has been?”

Manuel Esquivel

“Oh certainly, who likes to pay more taxes? Nobody, but we feel that it is equitable.”

Q: “And you don’t think that the, for example the remarks in the Pulse newspaper where the editor said that this tax would be passed into law within days following its first hearing at the committee, you don’t think that this was trying to jump the gun and be hasty and not gauge the reaction to it?”

Manuel Esquivel

“No, the Pulse is its own creature. They don’t dictate to the Government and the Government does not dictate to them.”

Q: “So, it was not your original intention to have this passed on June fifth as the Pulse said?”

Manuel Esquivel

“Definitely not.”

Q: “Who made that mistake then Prime Minister?”

Manuel Esquivel

“Well I think that the House itself sent out a notice that there was to be a meeting on the fifth of June which was not the Government’s intention. In any case if there had been a meeting on the fifth of June it does not mean that the legislation would have come up at that time. We recognized the shortness of the time available and we fully intend that people should be given as much time as is practical for us to deal with this.”

Q: “How does the House call its own meeting without the House calling it?”

Manuel Esquivel

“Well, I don’t know what happened there but certainly the notice came out that the Speaker had set the date for the fifth. I immediately contacted Mr. Kent and said, what is this we have received a notice that there is a meeting on the fifth. So I don’t know how that happened but it did.”

S.K.

“It’s obviously the same person that told Mr. Kent to call a meeting of the House, also told the editor of the Pulse the same thing presumably.”

Manuel Esquivel

“Well, must have been, but it certainly was not the Government.”

And if the Prime Minister was having trouble remembering who called the House meeting he had no such doubts about the performance of his Government over the last five years.

Manuel Esquivel

“I am satisfied that we have done a tremendous lot; I don’t think that people have actually measured the distance that we have come. You need to be reminded that when we were elected that was the year when the British troops left which in effect removed forty million dollars on an annual basis, not a one time basis – an annual basis from this economy. And we not only survived that but we survived that with a GDP growth even in that year when the first forty million dollars was withdrawn. You also need to remember that was the year in which the Mexican crisis emerged which diverted business away from Belize into Mexico. We need to understand that that was the year in which there was crisis in Guatemala, which also had a political effect on the working of the Government. So there are many, many serious shocks which occurred in this country immediately at the time of the election which we not only could but we were able to see economic growth even in spite of these tremendous shocks which normally one would expect a country or a Government the size of ours and with an open economy like ours hardly able to cope. But we not only coped we were able to survive it and to show growth.”

While it may not have been a case of “Manuel in the Lion’s Den” the Prime Minister did manage to emerge relatively unbloodied — but there are plenty of lions still out there and their claws will soon be holding ballot papers. Stewart Krohn for News Five.

The Prime Minister pointed out that those wishing to make their opinions known to the House Ways and Means Committee can still do so in writing. The committee will hold its final meeting on Wednesday. Amendments can then be recommended by the committee or even introduced on the floor of the House.