$61 billion Budget
By Andre Bagoo Tuesday, September 10 2013
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Finance humour: Finance Minister Larry Howai has Prime Minister Kamla Persad-Bissessar in stitches, even Energy Minister Kevin Ramnarine, centre, seem...
FINANCE Minister Larry Howai yesterday unveiled a $61.4 billion budget, yet again the largest in the country’s history.
The 2014 package — the PP Government’s fourth — includes what the Minister said was also the largest-ever capital programme of $8 billion. However, the deficit projection will shrink relative to overall productivity coming in at $6.3 billion or 3.6 percent of GDP.
The package saw the minister announce that a special fund will be set up to compensate the victims of car accidents involving uninsured drivers; Land and Building Taxes would return on a phased basis, but low income homes would get concessions; the $504 million fuel subsidy for Caribbean Airlines Limited (CAL) would be removed; a system of health cards would be introduced as a precursor to a national health system; 2,750 houses would be built in three years; and 6,000 new police officers and SRPs would be recruited.
On the day when the annual fiscal package announcement was upstaged by events relating to the ejection of St Joseph MP Herbert Volney, Howai also presented a series of “green” measures. He said all fines for littering would be doubled; land used for agricultural purposes would also get Land and Building Tax concessions; more aggressive incentives to encourage environmentally-friendly fuel CNG would be introduced and 5,800 acres of land would be leased to former Caroni workers under the “Green Initiative”.
“And it’s a different green, Mr Warner,” Senator Howai told the ILP interim political leader Jack Warner, who sat next to Volney just before Speaker Wade Mark announced Volney’s seat vacant. The ILP’s party colour is green.
As first exclusively reported by Newsday this week, Howai’s budget also contained a $1 billion allocation for tax refunds to be paid out, the introduction of unmanned aerial vehicles (drones), as well as an initiative with the government of Guyana for local investors to have access to 10,000 acres of Guyana land. Total revenue is projected at $55 billion (comprising oil revenue of $23.4 billion and non-oil revenue of $32.7 billion).
Total expenditure net of capital repayments and sinking fund contributions are projected at $61.4 billion. The Budget is based on oil and gas price assumptions of US$80 per barrel and US$2.75 per mmbtu respectively.
Of the fund for victims of car accidents, Howai said, “I propose, with effect from January 1, 2014, to establish by legislation, a Motor Vehicle Accident Fund using the funds from the six percent tax on insurance premiums. The Fund will be used to compensate victims sustaining bodily injuries from accidents involving vehicles driven by uninsured drivers.”
The Finance Minister also laid out how Land and Building Taxes — the scheme of taxation which pre-dated the stalled plan to introduce a new scheme of tax called Property Tax — would be gradually re-implemented. He said valuations for land would, in fact, be updated but on a transparent basis and there would be new concessions and a phased re-introduction.
“Mr Speaker, a land and building tax regime is a key pillar in all modern tax systems,” Howai said. “Recurrent land and building taxes meet all the conditions of a good and fair tax. The backbone of a successful land and building tax is the proper valuation of properties within a transparent framework. This will require the property rolls being brought up-to-date.”
The Minister said consultations would be held with stakeholders ahead of a planned phased re-introduction.
“I propose to phase in these taxes over the period 2014 to 2017 during which time the properties will be valued and consultations will be held with all stakeholders,” he said. “In phase one and effective immediately, we shall commence valuations of all industrial land, including plant and machinery, whether housed or unhoused with a view to implement this tax by July 1, 2014.”
He said deductible allowances will be provided to low-income homeowners.
“In phase two, we will impose a tax on commercial properties and in phase 3, we will impose a tax on agricultural lands and on residential properties with a deductible allowance to provide relief to certain agricultural land owners and low-income homeowners,” he said.
The minister was careful to not set a date for the implementation of phase two.
Amid regional and even international concern over the CAL fuel subsidy and whether it conformed to international free trade requirements, Howai said he felt it was time for CAL to be able to stand on its own and the subsidy would be removed effective October 1, 2013. However, he said he had been assured that this would not affect the consumer and the subsidy would stay in place for the Tobago airlift.
“Caribbean Airlines Limited must move towards the adoption of a financially-sound business model,” Howai said. “The subsidy for the Tobago airlift will remain....I have been assured by the Board of CAL that the removal of the fuel subsidy will not impact the ticket pricing policy.”
“The health card system will ensure that we have a register of all patients accessing the health services; this will enhance our ability to monitor and improve health services being delivered to our citizens,” Howai said. “The information captured and managed by this system will provide the basis for the development and implementation of a national health insurance system.”
Of his “green” measures, the fine for littering will move from $2,000 to $4,000 for individuals and $4,000 to $8,000 for corporations.
On crime, Howai said, “The Government will continue to adopt a zero-tolerance approach to crime. Gone are the days when our young people can use the excuse that the system is working against them. To whom much is given, much is expected and this Government will ensure that our streets are safe from the scourge of violent crime.”
He said it was ironic that billions are spent on security as well as on educating youth. He said there would be an increased police/army presence in crime hot-spots as well as reforms to the Evidence Act and the Defence Act.
See Pages 8A and 9A