Utility rates to drop

There are three products which will be taxed at twelve percent. These are petroleum products, alcohol and tobacco. News Five asked the Prime Minister how the consumer will be able to determine if he is being charged a fair amount for products under the new tax since it is being charged at the point of importation, or when the service is being provided.

Said Musa, Prime Minister

“I know it’s difficult for the consumer to really determine the cost of the product and where the inputs are. That applied under VAT as well; it is always difficult. Unless you can have a tax that clearly spells out, and I think in this case in many instances we will be insisting that the cost of the product plus the eight percent sales tax be clearly spelled out so people can know what they are paying for. Of course that will not apply for basic consumer items which it would be very difficult if not impossible to insist that the merchants should show the sales tax separately.”

Another tax reform bill modifies the Business Tax by reducing most rates. It only increases the rate for professionals and allows corporations to file under a corporate income tax. It allows deductions for charitable, religious sports or cultural organizations up to thirty thousand dollars. It also provides that Belizeans earning less than twenty thousand a year pay no income tax and puts a ceiling of twenty five percent for everyone else. The five percent tax on savings is also being removed. While attempting to make Belizean workers more comfortable and boost the local economy with tax cuts, foreign debt servicing is always a concern and this year is no different, at the end of 1998 the outstanding external debt stood at five hundred and five point six million dollars. With loans from Taiwan and debt forgiveness from the U.K. and Spain over the next four years the pressure may have been alleviated somewhat. The Prime Minister says the long term picture must always be considered.

Q: “Is this a quick fix and how are we going to be affected down the line with even more debt?

Said Musa

“I think that we will have to continue maintaining very prudent fiscal management of the economy. As I tried to mention in the speech, we cannot get away from the fact that we are not out of the danger’s zone. We have to be very careful in our expenditures and although there are many demands from the various ministries and various representatives now we have to maintain that tight control on expenditures. Because that is the bottom line: how you control your expenditure. I believe with proper management the revenue will come in. Even though we’ve reduced taxes, I think with the growth that we expect in the economy there will be additional revenue but that’s not to say we can just go on any spending spree.”