Arriving at the Lowered Threshold for Taxed Electricity and Other Measures

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Updated: March 14, 2017

Yesterday Prime Minister Dean Barrow presented the 2017/2018 budget entitled Bouncing Back – a bold Belizean recovery. Following the presentation, Prime Minister Barrow explained why certain measures were taken.

DEAN BARROW

“The question of trying to get at the objective but ensuring that there is minimal pain and that the pain is distributed in such a way that the most vulnerable that you don’t cripple business those sorts of considerations. The sin taxes those haven’t been raised for years and years and years so we felt that that is an area that was ripe for some kind of picking we did see that as low hanging fruit. The lowering the threshold in terms of the electricity bill before you pay GST again we did, not a scientific survey, but we did an unscientific sampling and we found that poor people don’t pay electricity bills of over $100 so when we lowered the threshold to $100 we didn’t think we would be hurting poor people. Remember that their bills are lower as a consequence of the fact that electricity rates have been coming down so the huge leap in the social fee of cigarettes in the Freezone. Two reasons it may have a counterproductive effect we do want to get revenue from it….”

LOCAL REPORTER

“But less cigarettes will be imported?”

DEAN BARROW

“But remember that there have been these complaints number one about counterfeit cigarettes coming into the zone, #2 Mexico and Guatemala say to us look the cigarettes from the zone coming into our countries they saw are coming in as contraband nobody is paying taxes so to some extent while you might say well if we did this as a way of discouraging the trade then that will mean that we won’t collect the taxes that we aim to get from the increase we ultimately think we send the right signal to our external partners and to those who have been complaining about contraband and counterfeit but we also feel that that won’t necessarily stop the importation into the zone and we do feel that we will collect most of the revenue projected which is the projected yield from that but this is the sort of thing we tried to do. Look the departure tax on non-Belizeans only by air we spoke to the BTB they thought that the industry could absorb it, the stamp duty increase on the purchase of foreign exchange permits, poor people don’t purchase foreign exchange permits. Again we wanted to do our very best to avoid and we did so manage anything like increase in business tax, anything like a roll back of the exemption threshold for income tax so the middle class wouldn’t suffer we were determined that we would not raise the rate of the GST or in fact get rid of the zero rated categories also we would not get rid of the exempt categories because the productive sector, the agricultural sectors depend on those exemptions and their abilities to claim back for their imports so we did the very best we could, we thought about this thing long and hard, there is no doubt that we are increasing taxes but we have tried to pick our spots the one that of course I regret the most is fuel but again you will see that notwithstanding the pact with OPEC shale production is on the increase in the states and so prices are coming down so we thought again that people would be able to absorb this one.”

The budget will be debated next week.