Prime Minister presents budget

The Island Newspaper, Ambergris Caye, Belize            Vol. 15, No. 3            January 20, 2005

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Last Friday, January 14th, 2005 among chaos and a crowd of protestors estimated at about 750 people, Prime Minister Said Musa presented his budget for 2005/2006. In his speech, Honorable Said Musa made several key points that the Belizean public needs to take into consideration.

     On the matter of new taxes, the government hopes to collect $91 million more in taxes, which go from $410 million to $501 million (an increase of 22%). In his speech Prime Minister Musa stated, "For this very reason we are proposing an increase in various business taxes. These are taxes that should be absorbed by business people and not passed on to the consumer and the relevant government agencies and activists will, I am sure, be vigilant to ensure that this is the case and that they will expose any attempt to pass this tax on to the unsuspecting consumer."

     Of the proposed tax increases, the following items will be subject to higher tax fees. Prime Minister Musa stated, "We therefore propose to raise: trade and other business taxes that are presently at 0.75%, 1.25% and 1.5%, to 1.75 %, except for radio, television and newspapers, for which there will be no tax increase; business tax on professionals, from 4% to 6%; business tax on banks under the Banks and Financial Institutions Act, from 10% to 15%; business tax on Banks in PIC groups of companies to 8%; business tax on real estate agents from 4% to 15% on their commissions; business tax on gross casino earnings from 4% to 15%. However, in order to protect small and medium enterprises, we propose to raise the threshold for businesses taxable under business tax from $54,000 to $75,000. Business that gross $75,000 or less shall no longer be required to pay business tax. Small businesses provide significant employment, and encouraging small businesses to be established and to grow is a key aspect of our struggle against poverty. Almost half of the new revenue will come from an increase in business tax, collection which is increasing by almost 50% from $66.9 million to $97 million."

     The other part of the revenue will be incurred by an increase in Environmental Tax, which was also proposed to increase from 1% to 3%. This increased tax will raise the government $15.5 million.

     Prime Minister Musa continued, "Tax on vehicles over four cylinders was increased to 5% stating this was done "with a view to reducing the number of gas guzzling and polluting vehicles such as the ubiquitous SUVs. The Environmental Tax does not apply to locally produced goods and has several exceptions for basic items."

     Higher taxes were also proposed for firearms, which tripled with the exception on shotguns used by farmers. The Prime Minister stated, "And then, finally, there are what are popularly known as the "sin taxes." We propose to double the excise on alcohol from $30 to $60 per gallon, to increase the excise on tobacco from $4 to $12 per carton, to double the excise on soft drinks, and to increase the excise on beer by 100%, from $1.80 to $3.60 per gallon."

     Prime Minister Musa continued, "Yes, we have had to propose new revenue measures, but we have been effective in reducing the amounts we needed to raise by sharply reducing government expenditure, and we have chosen the measures carefully to ensure that those best able to pay, bear a fair share of the burden, while avoiding undue hardship to public officers, teachers, and the working class. That is the PUP way. For those of us in leadership positions, painful lessons have been learnt. The road ahead is hard, and we are under no illusions about that."

     In his budget speech, aside from informing the country of the proposed tax increases it also deferred the payment of a promised raise of pay for public workers. "Since signing the Collective Bargaining Agreement with the public officers and teachers in February of 2003, we have honored our commitment to raise the salaries of junior and senior public officers by 5% and 8%, respectively. We intend to honor the final increase under this agreement, but we ask the unions to join the national effort of working to reduce the fiscal deficit and focus the resources on the priorities of health, education and poverty elimination. [...] We think this is a very reasonable request considering the benefits that have been enjoyed over the past six years. After consultation with the respective Unions, therefore, we propose that the agreed increases in salaries for all public officers, and the increases for pensioners, be staggered over the next three years beginning July 2005," Prime Minister Musa said.

     The Prime Minister concluded by saying, "The measures we take today, the work we continue tomorrow, are done not with an eye to the next election but to the next generation. Let us continue to work together, in solidarity and with justice, to create a new prosperity in this land of hope and promise for all Belizeans. With hard work and the blessings of the Almighty we will emerge from our time of adversity as a stronger, more confident, stable and secure nation and people.

     In an interview with Channel 7, Belize Chamber of Commerce President Arturo Vasquez stated his view the increased tax rates and spoke about the increased Environmental Tax by stating, "this tax is the same as if adding 2% to a sales tax. The Prime Minister was very clear in his speech, 'cause I heard it when he made the first announcement, that there is no increase in sales tax. I think the general public looks at sales tax as saying there's no sales tax increase and so maybe we've gotten away a bit. But to increase environmental tax from 1% to 3%, that's like 300% that is also like sales tax. 1% is currently being added to all imports coming into the country. That now goes to 3% so automatically all products on the shelves will be increased by 2% because that is a part of the import cost. But I think because of the word environmental, people on the street would say 'environment', maybe it doesn't affect me. So, I see that as being somewhat of a little...throwing in something and getting a 2% tax that is almost similar to the 8% sales tax."

     In an interview with Area Representative for Belize Rural South Manuel Heredia Jr., The San Pedro Sun learned that the budget speech was handled slightly differently this year. According to Honorable Manuel Heredia Jr, in the past years, elected officials, members of opposing party and the media receive a copy of the speech during the last quarter of the presentation. This year, however, that was not the case. The Government Press Office stated that they simple could not afford to print a copy for everyone.

     Leader of the Opposition Dean Barrow told The San Pedro Sun that the budget speech has always been transmitted outside the House in past years. This year, people were not able to enter the House, and the speech was not transmitted outside for the crowd to hear. "We will debate these increases on Friday," Mr. Barrow told The Sun

     On Monday, January 17th, The San Pedro Sun placed a call to Prime Minister Said Musa's office, but Mr. Musa was not available for comment, nor was our call returned as of press time.

     The budget will be debated tomorrow, Friday, January 21st, 2005. After the House passes the budget it will then go to the Senate, where it could be signed into law by next week. After the budget is approved, the new measures will go into effect in February 2005.
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