2010-2011 budget means increased sales tax and electricity tax

But while the economy did fare off well, the 2010 to 2011 budget comes with new tax measures.  Hardest hit is an almost five percent business tax imposed on electricity, meaning B.E.L., which soon afterwards caused a blackout, and a two point five percent increase in sales tax, which means that coupled with the two percent environmental tax, consumers would now be spending fourteen point five percent in taxes at the stores. The Barrow administration expects GDP to grow by one point five percent over the fiscal year.  That is attributed to agriculture and an expected increase in overnight tourist arrivals and electricity generation from the Vaca Dam facility and Belcogen.  But a recovery on the heels of three quarters in contraction resulted in an annual average of negative zero point eight percent of GDP which will not impact revenue sufficiently to restore the fiscal balance.  So how will the Barrow administration fill the sixty-one million dollar hole in the budget? By increasing taxes of course.  According to Barrow, if the gap in the budget wasn’t closed through taxes, the overall deficit would have increased to negative four point two percent of GDP.  And which taxes are expected to increase? Everything from your electricity bill to General Sales Tax, even the Export Processing Zones will suffer from increased taxation.

Prime Minister Dean Barrow

“The new tax measures are: Increase Business Tax for the supply of Electricity Services from 1.75% to 6.5%. This is only for the suppliers of electricity and this is projected to yield an additional 10 million dollars. This tax or this increase in their business tax is based on the profitability and the perceived ability to pay. It is still far less than such suppliers would be paying if they were under an Income Tax on Profits regime, since we note, according to the PUC, that profits in the sector continue to be bountiful. Second Mr. Speaker, we will impose an Excise Tax on Locally Produced Crude Oil at a rate of $1.00 per barrel – projected to yield $1.8 million per annum. This is to provide additional revenue to government and is done especially in view of the increased road maintenance on the Western and Hummingbird Highways necessitated by the transport of the crude oil to the port at Big Creek. I repeat what I said earlier about the need not to destabilize the nascent petroleum industry. But at a time like this, the sole producer cannot be boasting abroad of how well it is doing without being prepared to give a little more to the country and society that have enabled its bonanza. Third Mr. Speaker, we will levy a Social Fee at a rate of 5% on the value of all Goods and Services imported into Export Processing Zones. This should yield a further $3.5 million. It is felt that a small fee to offset the duty free status of the EPZs would not threaten their operations or their international competitiveness. Then Mr. Speaker, we will press the collection of Outstanding Tax Arrears and this is expected to yield $4.2 million. We are looking at two things here. One is some still outstanding taxes never paid by the previous owners of B.T.L.—news owners of Speednet. The other has to do with land. When the land tax regime was changed by the last government, a howl of protest went up from the big landowners. In consequence, the new dispensation was never implemented, and statutory instruments were passed to allow collections done by reversion to the status quo. Even so, too many of those same landowners still refuse to pay. The idea now is still only to collect at the old, easier rates but to use all available processes to collect at those rates. Finally, Mr. Speaker we have to increase the rate of the General Sales Tax from 10.o% to 12.5 %. This will yield $42.0 million. We have had no choice in this matter.”