Senate Passes Fiscal Incentives Amendment Bill for Major Investments

The Fiscal Incentives (Amendment) Bill was also passed today in the Senate after it went through all its readings. The legislation will provide a standard on incentives for investments worth more than five hundred million Belize dollars. The move comes after the Briceno Administration recognized a need to strike a balance between attracting investments and financial inducements. However, Opposition Senator Michael Peyrefitte argued that the initiative is targeted toward large-scale investment, putting many Belizean investors far from accessing such incentives.

Michael Peyrefitte, Opposition Senator: “This kind of love, kind of rough to a local investor, for example or a big businessman in this country who is big but not big enough to spare $250 million US dollars. You’re saying, and I understand, I understand, I understand. If you are bringing 250 million US to our shores, bring it. Bring it. You don’t even have to fill out a customs declaration. Just bring it and spend it in the economy. But I don’t know, I don’t know, Madam President. It’s not, it’s just that certain things just, wow. And especially with this government, man, this government, this PUP government, man. 16B, notwithstanding the requirements for eligibility under this act in determining whether to grant a fiscal incentive order to a high investment company. Minister, Now this government campaign, if it is so standardized and so cookie cutter in nature, why the minister? Again, you guys said you would do what you could do to reduce the power and interference of ministers, you know ? Reduce, take ministers out of the equation and you already have Beltraide, what do you need the minister for ? But anyway, the minister, shall have regard to whether the company provides proof that the investment has met or will meet the investment requirements. So I promissory note works again. You don’t have to have the money you know ? You just have to show that, don’t worry I will get it. Or I promise you I will get it. Where is the safeguard that this money will be here?  I know I see a $50,000 application fee. But for all these exemptions $50,000 is nothing to spare. You have a lot of these public companies, you know, Madam President they come to Belize, they want to get all these exemptions so once they have it on record they use it to float public companies, raise capital and never come with the investment. And all it has cost them is $50,000.”

Also raising concerns about the threshold for investors to access incentives was Business Senator Kevin Herrera. He questioned how the government arrived at such a large figure and portions of the Bill providing certain authority to the Minister of Finance.

Kevin Herrera, Senator, Business Community: “My question, Madam President, is where does this $250 million come from? If we develop a policy or we pass a policy such as this today will it be effective to capture the type of investments we really want to capture? $250 million in a small economy like this seems excessive, especially if you look at it in the context of our annual budget. I mean, we could round it off to $2 billion in terms of spending per year. And so if you look at 250 million U.S., you’re actually looking at about 25 percent of the total annual budget which again is a large amount. And so again, I really don’t know where the $250 million is coming from or $500 million Belize dollars is coming from. But again, it seems pretty large. And in my mind, I’m wondering, will we even have investments of this size. And if the objective is to try to provide these incentives so that you could attract investments in this area, that bar might be a little high if that was the objective. And so it’s something that I would appeal to the government to maybe look at, just to make sure that if the objective was that, that you want to make sure that it is capturing it there. Now, Madam President, we’re talking about, again, a policy decision today. And then if you look in the bill, I think Senator Peyrefitte pointed out at several points but if you look at 16 BC you see where it mentions that, it mentions the minister being satisfied that the investments will be beneficial to the country. So it puts the minister at the forefront of operations, in my view. But then we’re looking at the minister and government setting the policy. And I don’t believe that they should be operational because you have other people who are dealing with it at that level. And so that’s certainly an issue for me.”

Senator Coye rose to respond to the concerns raised about the size of investments that will apply under the bill and clarified that the move will lessen ministerial inferences and allow for a more level playing field for large investments.

Christopher Coye, PUP Senator: “The preference is not to have customized exemptions like the state bank legislation or the NGC legislation, but to have a more standardized approach to treatment of exemptions for all these large scale investors. And that is what this legislation seeks to do. But what this legislation also, this amendment bill also seeks to do, is the very opposite of what is being spoken about, about ministerial discretion. Absolutely not. This in fact creates a new check on ministerial discretion. 16B subsection six, is it subsection six? Subsection 5 specifically requires the approval of cabinet. So there is no side arrangement that can occur. It has to come to the executive arm of government. How is that in any way ministerial discretion being unduly exercised? Even if the recommendation of the executive director after the analysis by the whole Beltraide team is done and is against the process and it is appealed to the minister. The minister can’t approve on his own. The minister has to come to cabinet and get the cabinet’s approval. But even before that, what’s important to appreciate is  the full-scale, in-depth analysis that is undertaken by Beltraide. That there’s a full-cost benefit analysis, the impact to the economy. That’s what, that’s Beltraide’s job. All the social components that are of concern, that is embedded in that analysis. And that is where, once that analysis is done, the executive director then makes the recommendation on behalf of Beltraide as the legislation provides, justification having to be provided along with that recommendation. So there is no abuse. This is in fact the check that is being established because it is a high scale investment that is being considered for exemption.”

The bill was also passed and will return to the Senate to be passed into law.