G.S.T. & Registry deal: hot topics in the National Assembly
It was back to business in the National Assembly today and back to the front bench for area representatives Mark Espat and Cordel Hyde. But their return was not the subject of debate… instead the attention was focused on registry scandal and the new General Sales Tax set to replace the loophole riddled Sales Tax. Janelle Chanona was in Belmopan today and files this report.
Janelle Chanona, Reporting
Touted by the Musa administration as the first step in a comprehensive tax reform process, this morning Prime Minister Said Musa introduced the bill that would repeal the Sales Tax Act and replace it with the G.S.T. or General Sales Tax.
Prime Minister Said Musa
?Soon after returning to office in 1998, we abolished the inequitable Value Added Tax or the Killa VAT as it was called at that time and replaced it with a simplified sales tax regime. The system has worked well over the years, but experience has revealed some of its deficiencies, particularly the negative effects of what is called ?cascading?, a term which is used when tax is charged on another tax.?
?The General Sales Tax, or G.S.T. for short, is essentially a consumption tax collected in several statues along the way to the final consumer. The G.S.T. uses an input tax credit mechanism to prevent cascading taxes on business and generally utilises the destination-based principle of taxation. Under this bill business will pay tax on their purchases, called input tax, and add tax on their sales, called output tax. This will benefit both producers and consumer alike. The effective tax rate for most goods will be reduced and the tax based will be broadened to include the services sector. More importantly, neither goods nor services will be taxed twice since businesses registered for G.S.T. would be able to collect the tax and take credit for the taxes paid on their inputs or purchases. This would eliminate any element of tax cascading. The difference between the tax collected on sales and the tax paid on purchases will be paid to the government. In the case of exporters, the input tax related to their exports will be refunded once the goods are exported. In addition, the G.S.T. would relieve tax paid on capital expenditure and other business expenses by allowing registered businesses to claim the full credit for taxes paid on purchases.?
?As for the rate of tax Madam Speaker, the bill provides and proposes for only two rates, a single positive rate of ten percent and a zero rate of no percent. The schedules to the bill identify the items which are subject to the zero rate. These include all exports, basic food stuffs, supplies connected with agriculture and education, which would be zero rated. This would mean that no tax will be payable on the supply of these goods and services and therefore the price to the ultimate consumer would contain no element of G.S.T. The zero rating would also benefit exporters since this would remove any element of local taxes from the cost of goods and services. The many thousands of water and electricity consumers will also be exempted. Madam Speaker, on the whole, this bill, which is essentially a restructured and reformed Sales Tax Act, will improve the efficiency of the tax while eliminating its negative impact.?
The new tax will include far less exemptions, but repeal other taxes such as the entertainment tax and property taxes for property valued less than twenty thousand dollars. But according to the Prime Minister, the best thing about G.S.T. is that there is little or no room for creative accounting practices.
Prime Minister Said Musa
?The main attractiveness of this G.S.T. is that it will address and deal with the problem of people who are cheating the system. That is what attracted me to this system most of all. It will be a far better self-policing mechanism. It will be deal with those who are under-invoicing, the few unscrupulous business people who are under invoicing and providing false information to the Customs Department.?
Janelle Chanona
?Do you think the fact that in essence we have been told that the G.S.T. is VAT, do you think that is in any way an indictment against the Sales Tax in its technical organisation and its design??
Prime Minister Said Musa
?No, I don?t think so because the Sales Tax, the truth of the matter is, has brought in considerable revenue. It has brought in considerable revenue, but it?s still a burden, particularly on the productive sector. And these are the people we want it to provide incentives for as opposed to create burdens for them.?
But while the G.S.T. was expected to be the highlight of today?s session, the hot topic on the table was actually the Registry scandal.
Michael Finnegan, Area Rep., Mesopotamia
?Madam Speaker could we classify it as demonstrable incompetence, demonstrable dishonesty??
Godfrey Smith, Area Rep., Pickstock
?Point of Order, Madam Speaker. Section thirty-eight of the Standing Order obliges members on either side of the House not to impute improper motives to any member of the House.?
Michael Finnegan
?Madam Speaker.?
Godfrey Smith
?The Standing Orders are clear in section thirty-eight-five.?
Michael Finnegan
?Madam Speaker me noh di seh the minister dishonest at all.?
Godfrey Smith
?May I finish? May I finish my point of order, Madam Speaker? Not only is that obligation put under thirty-eight-five, but it goes further that if you are going to enter into the conduct of any member of House, either side, there is a manner to do that. That?s the obligation under section thirty-eight-eight. There?s a procedure in which you have to do that if you are going to embark on that. He can speak as much as he wants about the transaction, but if he is going to venture into improper motives and conduct, there is a procedure for that. So I insist that the Standing Orders be followed.?
Michael Finnegan
?Madam Speaker, I noh di seh nobody dishonest or anything. I am saying I wonder if this can be classified as demonstrable dishonesty, demonstrable corruption, or demonstrable incompetence? That?s what I am asking, I am asking questions. And I would hope that I will get some answer, and the public deserves and answer at the end of this meeting. Madam Speaker, let me continue… because of the faceyness and because of the incompetence, in my view, of the minister?s conduct in connection with this contract, they as a government have defrauded poor people millions of dollars because of the signing of that contract. Because of the minister?s incompetence, because of his faceyness??
Elizabeth Zabaneh, Speaker of the House
?Honourable Member, just a second…you don?t know that he is incompetent and you don?t know that he?s facey??
Michael Finnegan
?You don?t know either.?
Elizabeth Zabaneh
?No.?
Michael Finnegan
?So mek I talk noh. You wah mek I quarrel with you again Madam Speaker??
Elizabeth Zabaneh
?But you don?t need to do that to that at all??
Michael Finnegan
?Allow me to talk.?
Elizabeth Zabaneh
?Just keep it??
Michael Finnegan
?You don?t have to defend the minister, the minister wah defend himself.?
Elizabeth Zabaneh
?I am not defending the minister, I am just asking you to keep it kind. We don?t impute motives. That?s exactly what you?re doing.?
Michael Finnegan
?Madam Speaker, corruption, incompetence, faceyness is not something between you and your friend when you di run a country and you?re running a government, Madam Speaker. The member from Pickstock must not only resign from the Cabinet, he must resign from this honourable House if he is a silent partner in this company.?
?He must do what is honest, resign! Be honest for a change inna we life. Get up and do the honourable thing and resign! What you have done has caused disgrace on our government, on our people of this country, and you ought not to be a member of the Executive of this government. Madam Speaker, my leader went on to say, the Leader of the Opposition, that the member from Pickstock is a silent partner in this company. Madam Speaker if that is true, then the member from Pickstock must not only resign from the Cabinet, he must resign from this honourable House if he?s a silent partner in this company.?
Godfrey Smith
?Madam Speaker, the honourable member from the Mesopotamia Division has this afternoon made extremely irresponsible statements. The call for my resignation for instance, has to be predicated on something substantial. At the time, it did go to the Minister of Finance; it was vetted by the legal council to the Ministry of Finance at that time. So clearly it didn?t go to the Prime Minister, it went to the Ministry of Finance. As the Prime Minister has stated publicly as well, the whole idea for the concept of privatising or outsourcing the Registries did go to Cabinet. It is not the habitual practice for the actual contract to go to Cabinet, but it did pass through the Ministry of Finance, it was looked over by the legal council for the Ministry of Finance. So again, I don?t know what the member from Mesop is taking about when he said that nobody knew about it, it was shrouded in secrecy. Nothing could possibly be further from the truth.?
?In hindsight one can look back and say, yes, well none of these should have been fashioned like that, these things happen. I do not deny that, I freely admit that the fee sharing was perhaps not of the best, but as I said, it was fashioned off existing agreements. And finally, the issue of my own involvement??
Elizabeth Zabaneh
?Quiet honourable member, nobody interrupted you, be quiet.?
Godfrey Smith
??yes I signed the agreement, but I did not, I at no time was an owner of the company or held shares or did anybody hold shares for me. Not only at this time, but from the very inception and I stand by that. The question of suing is a matter for the discretion of myself. I have six years within which to do that. I on this side will not be distracted by any challenged to be drawn at a time which is not of my suiting or the party?s suiting.?
John Saldivar, Area Rep., Cayo South
?It was revealed, Madam Speaker, what we can only term as a blatant act of corruption on the part of the parties that were involved. It would seem to us Madam Speaker that each time we come to this House and we pass laws, it is to facilitate the movement of public monies from government to private individuals. We on this side of the House, Madam Speaker, now that the Registry is being returned to the public domain, would like to demand that a full audit and account of the funds that have been received by the Registry while it was privatised, be made available to this honourable House.?
Patrick Faber, Area Rep. Collet
?Moody?s just downgraded us again last month. We would wish they would go away. But the truth is Madam Speaker they will not go away because this government continues to engage in the kind of shady practices. That is evident Madam Speaker. Every single week you hear of a new scandal busting, busting. The scandal dem di bust out deh; every single week almost, Madam Speaker.?
?The member for Mesopotamia called on the resignation of one particular member. Well I will take it further. Madam Speaker I believe that they all must resign and give the people a chance to give a fresh mandate Madam Speaker, because the only thing that can fix the problems that Belizeans have with the economy is a credible government.?
Prime Minister Said Musa
?A little knowledge is a dangerous thing. Obviously somebody game him some notes and the Moody?s report to read into this House. Well I am sure all the members of this National Assembly have already read the Moody?s report??
Patrick Faber
?What about the Belizean people??
Prime Minister Said Musa
?Just shut your mouth for now eh, please.?
Elizabeth Zabaneh
?Now, now. Come on.?
Patrick Faber
?But Madam Speaker he told me??
Elizabeth Zabaneh
?But you are interrupting. You had your turn. I am telling you to be quiet.?
Prime Minister Said Musa
?I did not interrupt you one moment member of the Collet division. Obviously you?re all hyped up; you might get an aneurysm if you don?t behave yourself. Please, we don?t want that to happen to you.?
?Because of the measures that we have been taking over the past year, the fiscal situation is improving, we are going to bring down the fiscal deficit, and that will be shown when we have the budget debate and discussion when the budget estimates are presented. We are at the moment engaged in ensuring that we have a much better and a much improved management of the public debt situation, because that is the thing that got out of control. It got out of control because of the tremendous losses that we had and because of all these economic factors, exogenous factors that have been affecting our country. So you can call it mismanagement and call it anything you want. The fact of the matter is Madam Speaker, the truth of the matter is that we are dealing with the challenges. And the truth of the matter is that Belize, despite all its problems, continues to grow and we will have a healthy growth rate. Not as much as we want it to be and we are going to work to make it even higher, but growth continues, development continues in Belize. Thank you.?
Reporting for News Five, I am Janelle Chanona.
The debate on the G.S.T. will take place at the next sitting of the House of Representatives.
