P.M. goes to House to alter Income and Business Tax Act

The House of Representatives met this morning and by early afternoon, its business had been concluded on a wide range of issues. As predicted, at this morning’s session, Prime Minister Dean Barrow introduced a bill to alter the Income and Business Tax Act. Affected in the changes are two entities: Public Investment Companies and telecoms. According to Barrow, for years commercial banks, which pay a rate of fifteen percent, have been complaining about the unfair advantage that the P.I.C. entities enjoy. The bill seeks to increase the rate of business for P.I.C.’s from eight to twelve percent. Meanwhile, the tax for telecoms will go from nineteen to twenty-four point five percent. The Prime Minister told the nation why G.O.B. made the changes.

Prime Minister Dean Barrow
“That eight percent rate deriving from the PIC status is arrived at by way of the application of a formula that is set out in legislation in the I.B.C. act. It’s a mathematical formula and when applied currently by the last government and this is what we inherited when we got in, it is said that the calculation results in the eight percent. Our experts have looked at the mathematical formula and done the calculation and they say that applying that very same calculation, not changing it one bit, not interfering with the I.B.C. legislation at all, they arrived at a proper rate of twelve percent. So what I want to signal is that we’re not interfering in anyway, although there are some people that would probably say that we should, we’re not interfering with this special status that’s been conferred on this banks as a consequence of their PIC associated status. All we are doing is, in our view, correctly applying the mathematical formula that governs that status and that allows us to arrive, we think, accurately at a rate of twelve percent.”

“When it comes to telecommunications, Mr. Speaker, in our view, as long as this sector continues to be characterized by a duopoly, government will always have to look very closely at the profits made by the duopoly with the view of evening out things in terms of the take that the government and therefore the consuming public ought to secure by way of the tax revenues. The sector is characterized by a duopoly because there are only two companies that operate in that sector: Speednet and Telemedia. We are convinced that given that these are the only two players and that they have a captive telecommunications market, they can afford to pay the increase in taxation that the amendment to the taxes proposes.”