|
A BLP Government will modify the tax system to respond to
a set of new economic forces, and to enable us to achieve
powerful social and economic goals.
Insofar
as Barbados will function as part of a Caribbean Single Market
and Economy (CSME) after 2004, we must structure our tax system
to be the most competitive in the region, and to make Barbados
the preferred business centre in the Caribbean.
After
2005, our tax system must accommodate removal of import duties
in accordance with FTAA,
European Union, and WTO trade agreements.
Our fiscal
system must also feature attractive incentives to spur personal
initiative, promote high levels of savings and investments,
and provide fair and reasonable returns as stimuli
to private investment.
It must
provide attractive concessions for families,pensioners and
the physically challenged as well as for small business and
other enterprises that offer special opportunities for our
youth and others in need of a helping hand.
The BLP
will reform the income tax system through a number of new
measures.
LOWER INCOME TAX, INCREASED ALLOWANCES
The BLP
recently amended the Income Tax Act to:
- Increase
personal allowance from $15,000 to $25,000 over four years
by annual
increments of $2,500, starting in income year 2004.
- Reduce
the basic rate of income tax from 25% to 22.5% in 2003 and
to 20% in
2004.
- Reduce
the top rate applicable to taxable income in excess of $24,000
from 40% to 37.5% in
income year 2005, and from 37.5% to 35% in income year 2006.
A BLP
Government will review the personal income allowance in 2007,
and increase it as
financial circumstances allow.
MORE WILL BENEFIT FROM HOME ALLOWANCE
In 1992,
the DLP abolished the allowance for mortgage interest, a benefit
that brought welcome
relief to lower and middle income home owners.
- The
BLP reinstated the Home Allowance, set first at $3,500,
then further increased to $6,000, which is to be expanded
to $10,000 from income year 2004.
We expanded
this allowance to give taxpayers a tax credit for expenses
for installing water storage facilities, solar water heaters,
storm shelters, and for home repairs and improvements, and
for home insurance premiums, as well as interest on mortgages.
We will
review this allowance in 2006 and will increase it as the
country’s financial circumstances
permit.
- We
pledge that the Home Allowance will be a permanent component
of a BLP Government’s tax system.
GENEROUS CONCESSIONS TO ENCOURAGE
SAVINGS
A BLP
administration will introduce a consolidated savings allowance
that will offer generous concessions to encourage savings,
while allowing freedom in how taxpayers organise their savings
and investments.
INCREASE IN REVERSE TAX CREDIT
In 1998,
the Barbados Labour Party introduced the Reverse Tax Credit
to provide relief to those who whose income did not exceed
$13,000 and who therefore could not benefit from income tax
concessions.
Parallel
with our programme to increase the personal income to $25,000,
we will progressively extend the number of taxpayers enjoying
this benefit from the present income level of $13,000 to $25,000;
and we will increase the quantum of the Tax Credit as circumstances
allow.
LOWER CORPORATION TAX
We amended
the Income Tax Act to reduce the Corporation Tax from the
current 40% to
25%, by 2006.
The next
stage in our reform of Corporation Tax will be the removal
of the differential between rates paid by domestic enterprises
and those in the International Business and Financial sectors.
LOWER TAX RATE FOR SMALL BUSINESS
Under
the Small Business Development Act introduced by the BLP,
small businesses pay tax on profit at a rate of 25%. The next
BLP administration will reduce the Small Business Tax Rate
to 20% when the General Corporation Tax rate reaches 25% in
2006.
TAX BREAK FOR HOME CONSTRUCTION
To encourage
home building, we will establish a special corporation tax
rate of 20% for firms engaged in housing construction.
TAX CONCESSIONS FOR SPECIAL
DEVELOPMENT AREAS
Special
development concessions have played a major positive role
in the redevelopment of Speightstown, Carlisle Bay, St Lawrence
Gap and the Scotland District.
We will
extend concessions to such locations as Baxters Road, Tudor
Street, Roebuck Street and other areas designated for urban
renewal.
WE WILL PHASE OUT IMPORT DUTIES
To fulfil
our obligations under the FTAA and WTO agreements, Barbados
will, from 2005, begin phasing out import duties.
This will
be a major tax adjustment, as import duties currently range
between 20% and 45%, and yield $170 million in revenue.
The removal
of import duties, while reducing Government’s tax revenues
heavily, will be of major
benefit to consumers and to the economy.
Their
removal will lead to substantial reduction in prices, and
will assist in reducing the cost of doing business; especially
in the tourism and international services sector.
The BLP
administration will stimulate economic activity to replace
the significant loss in revenue that will result from these
adjustments.
NO VAT ON COMPUTERS
To propel
our thrust to make Barbados a First World society, we must
ensure that information technology is available to all Barbadians,
as a learning tool and as a business option.
To this
end, a BLP Government will remove the VAT on computers and
computer supplies.
FURTHER EASE ON PROPERTY TAXES
We will
exempt the first $125,000 in property value from payment of
land tax, place a ceiling on the value on which land tax will
be charged and permit property owners to pay annual land tax
charges in quarterly instalments.
REDUCING PROPERTY TRANSFER
TAX
A BLP
Government will reduce the property transfer tax vendor rate
from the current 10% to 7.5%.
Whereas
existing legislation provides for payment of property transfer
tax on leases in excess of one year, we will amend the Property
Transfer Tax Act and Stamp Duty Act to exempt leases of up
to 25 years.
INCREASED PENSIONS
Pensioners
earning income that makes them liable to tax already enjoy
major concessions that are not available to other taxpayers.
They enjoy a personal allowance of $30,000, which ensures
that
any pensioner living only on a National Insurance pension
is free of tax liability on such pension.
We will
maintain a personal allowance for pensioners that will free
National Insurance pensions from tax liability and we will
increase it as circumstances allow.
Pensioners
over the age of 60 enjoy the concession of paying land tax
at half the rate of other property owners.
Such pensioners
will now further benefit from exemption of the first $125,000
in property value from payment of land tax, as well as from
the increase in home allowance.
The Barbados
Labour Party administration has removed the tax on interest
on savings for pensioners, a concession that will remain in
place.
We will
increase the grants to non-contributory old age pensioners
and persons with physical and other disabilities.
CENTRALISING REVENUE COLLECTION
AGENCIES
The BLP
will establish a Revenue Authority, which will centralise
all revenue departments, except Customs, in order to improve
the collection of revenue, and generally enhance efficiency.
DEPOSIT INSURANCE FOR YOUR
PROTECTION
We will
establish a statutory Deposit Insurance Corporation, which
will insure and protect people’s deposits in banks and
other financial institutions up to prescribed limits.
| |
