The Barbados Financial Statement and Budgetary Proposals 2011 was presented by the Hon. Christopher P. Sinckler, MP, Minister of Finance and Economic Affairs on 16 August 2011. It was Sinckler's second budget presentation.
The Barbados government Tuesday unveiled a BDS$3.3 billion (US$1.65 billion) tax free budget to Parliament on 16 August 2011, but stopped short of rolling back stringent economic measures introduced in the November 2010 fiscal package.
Finance Minister Chris Sinckler however outlined a reduction in the property tax and incentives for the business and tourism sectors.
The Finance Minister also announced some measures to ease the strain on Barbadian households these include adjusting the land tax band on residential properties by BDS$40,000 (US$20,000).
"I therefore proposed that effective this tax year, the existing tax bans should be adjusted while maintaining the current rate structure to allow the parity to be maintained with the aggregate taxes payable for the tax year 2010/2011.”
He said the new rates will be done as follows: “for residential property at present the first BDS$150, 000, (US$75,000) is exempted from tax. We propose to raise that to BDS$190, 000(US$95,000). That of course will mean that an additional set of people will now not be paying taxes".
But Sinckler said that the government would get tough on people who refuse to pay taxes.
"It is also proposed that effective tax year 2011, the late filing fee will be increased from BDS$100 (US$50) to BDS$500(US$250).
“We are doing this measure not as a revenue generating measure or for that purpose but to increase the level of compliance with the income tax act with respect to filing whether or not a tax refund is due".
Sinckler said the Barbados economy is expected to grow between 2 to 2.5 per cent this year.
“This increase is based on the apparent recovery in tourism over the last year. The industry is expected to grow in real terms in excess of three per cent” he said.
Sinckler admitted that the 2.5 per cent hike in the Value Added Tax (VAT); a 50 per cent increase in the excise tax on gasoline, as well as a rise in bus fares outlined in last year’s budget were “burdensome for most and perhaps painful for some” but he insisted that the government’s plan has been yielding positive results.
“Clearly Mr. Speaker, from the outcome of the first six months of this year and in particular for the first quarter of the financial year, that effort appears to be bearing fruit. Revenues are stabilizing and growing over last year, expenditures behind most stringent inputs from the Ministry of Finance are beginning to come down, “Sinckler told legislators.
He was critical of those who had who had been critical of the economic policies of the Fruendel Stuart administration, suggesting the recovery was in fact sound.
“Indeed Sir, this performance which we expect to continue to improve, is as good as or better than the earlier recovery years of any previous recession which we have encountered in this country in the last thirty years.”
Despite Sinckler’s report that the economy was finally turning the corner from the punishing global recession, he stressed that the government could not afford to remove the measures.
“But the economic cold is not gone yet and while some symptoms are clearing, the deeply embedded are still lingering and a discontinuation of the medication after only a relatively short period of time would be a grave mistake.”
He said that Barbados must be “firm, focused and forward looking” if it is to entrench the gains it has already made.
- The adjustment of the existing land tax bands while maintaining the current rate structure.
For residential properties:
- At present the first $150,000 is exempted from tax. I propose to raise that to $190,000.
- The rate of 0.1% is applied up to the next $400,000 in value. I propose to raise this to $500,000.
- Up to $1,250,000 in value a rate of 0.45% will be applied. This moves up from $1,000,000, and
- A rate of 0.75% will be applied to all properties in excess of $1,250,000. This is an increase of value of $250,000 up from the previous value of 1,000,000.
- The basing of all land tax rebates on the tax demanded.
- The granting of a rebate of no more than 50% on the land tax demanded for that year, for properties which can prove that they have engaged directly in the manufacturing activity and those which have been certified by the Division of Energy to be engaged in the production/manufacture of solar energy.
- The requirement of a tax clearance certificate from Inland Revenue Department and VAT Department in order to access the rebate on land tax.
- The granting of all rebates on land tax within the year in which the tax is due.
- The payment of land tax bills by the hotel sector and restaurant during the last quarter of the fiscal year without losing access to the discounted rate.
- The increase in the energy conservation and renewable energy deduction from $5,000 to $10,000 per year for individuals and $25,000 per year for registered small businesses.
- The write-off of 150% of costs associated with the conversion to alternate energy over a five year period for businesses whose filings with the Inland Revenue Department and VAT Division and whose compliance with NIS and Land Tax are up to date or who have in place arrangements to settle their arrears.
- The increase in the late filing fee for income taxes from one hundred dollars ($100) to five hundred dollars ($500).
- The separation of business and employment income for the computation of tax payable with effect from tax year 2011.
- A 100% waiver of interest and penalty on outstanding tax due to the departments under the Waiver of Interest and penalties programme if payment of eighty percent (80%) of the amount due is made in full by a one-off cash payment.
- The reduction of the fees payable by paramedics, medical technicians and medical dispatchers under the Profession, Trade and Business Act, Cap 373 in line with that payable by nurses.
- The reinstatement into the Income Tax Regulations of the tax free status of the 25% lump sum payment to persons on reaching retirement age.
- The implementation of the new fee structure under the Occupational Pension Benefits Regulation with effect from September 1, 2011.
- The amending of the Occupational Pension Benefits Regulation to permit a drawdown account to be used as a variation on the form of pension payment available to a member upon retirement from a defined contribution plan.
- A reduction of the taxes paid by businesses on remittances to insurers based outside Barbados who provide global insurance coverage from income year 2012.
- An amendment to the VAT Act to allow hotels offering time share properties to claim a refund of input tax paid in respect of goods purchased locally.
- Zero rating for VAT purposes of all sporting vehicles, equipment and gear temporarily imported for the sole purpose of competitive activities with effect from September 1, 2011.
- The provision of a rebate of up to five thousand dollars ($5,000) to farmers who retrofit their livestock housing structures with the use of solar energy.
- The provision of financial assistance for the purchase of three mulch compositors and three row mulchers and the accompanying mulch lifters to give fruit and vegetable farmers access to cost effective equipment to be used for production and application of disease and weed-free organic matter.
- The reduction of the interest rates on loans from the Agricultural Development Fund to 5% over the next three years.
- The discontinuation of duty free concessions to the hotel and manufacturing sector on the importation of electric water heaters effective January 1, 2012.
- Effective 1st September 2011, all parts imported into the country for the purpose of assembly of personal computers will be free of all import duties and VAT.
- The dematerialisation of all Government Paper with effect from January 1, 2012.
- With effect from January 1, 2012, the exemption from publishing a prospectus by SMEs wishing to access equity through an issue of shares under specific conditionalities (where issues are no more than BDS$5 million, where the issues are made to no more than 500 persons and as long as the issuing company is listed on the Barbados Stock Exchange).
- The provision of an energy grant of $5 million through the Welfare Department to assist the disabled and aged with payment of their electricity bills.
- Government of Barbados will provide by way of a government backed guarantee, a facility to provide for the borrowing of $50 million dollars in amounts of $10 million every year for the next five years starting in 2012 to support this mechanism. These resources will go directly to support the promotional, marketing and distribution efforts outside of Barbados of Barbadian musicians, artists, designers and chefs.
- The Ministry of Finance will undertake on a case by case basis to support requests for partial waivers of duties on some equipment required to upgrade music studios across the island. This will be facilitated in collaboration with the Ministry of Culture and the Small Business Association.