By Lavern Clarke, Staff ReporterDR. OMAR Davies, the Finance Minister, yesterday announced a round of new taxes aimed at raising $205 million in revenues to help finance the $13.5 billion increase in the Supplementary Budget. They take effect from January 1, 2003.
And he told Parliament that promised legislation to improve tax compliance would be fast-tracked through the House by January to raise an additional $1.1 billion.
The legislative amendments, he said, would include provisions for the recovery of taxes from third parties, amendments to the GCT Act, as well as tax exemptions.
The increased taxes that Dr. Davies laid before the House cover motor vehicle licences and examination fees, gun licences, as well as more stringent penalties for traffic violations, Customs and income tax breaches.
Motor vehicle fees which were last increased in 1999, move from $750 to $1,500 for a fitness test, while the licensing charges have moved up by 33 per cent in all categories. The fees will now range from a low of $700 in the motorcycle category to a high of $8,000 for heavy-duty trucks and tractors.
Other increases cover firearms dealers, who will now pay $10,000 for a year's licence, up from $2,500; and firearm users, whose licence fees will move to $3,000 from $1,500. Spirit licences now range from $1,000 to $15,000 doubling all but one category in the current $50 to $7,500 charges.
Dr. Davies gave no indication where the other $12 billion would be sourced, but Audley Shaw, JLP Spokesman on Finance, said the hole in the Budget would obviously be covered by borrowing.
Dr. Davies' announcement of the new tax measures was preceded by his disclosure that the fiscal deficit worsened to 8.4 per cent of Gross Domestic Product, way below the programmed 4.4 per cent target; and that the public debt had grown by 8.3 per cent or $41.4 billion to $538.5 billion.
It moves the projections for the debt as a percentage of GDP to 141 per cent, a seven per cent climb over the 134 per cent recorded in March.
The increase in the 2002/03 budget arises from six areas outlined by Dr. Davies, including net interest payments of $3.8 billion, a significant increase in the wage bill of $8.2 billion, payments to Blue Cross of $900 million, and increased pension payments of $200 million.
Also, it covers $1.1 billion of increased grants to local authorities to cover shortfalls in property tax collections to pay for public lighting and garbage collection; as well as a $350 million provision for Local Government elections scheduled by March 2003.
In some cases, the increases are as high as 1,000 to 2,000 per cent.
The jump in the Customs fines, however, were the steepest. Fines of $500 and $1,000 for example, have been increased to $100,000.
The penalties - spread across 50 categories of breaches - range as high as $500,000, and in specific cases include imprisonment for up to five years, as well as forfeiture of goods in some cases, for example, the short-loading of bonded goods, and loading goods for carriage by coast at places not approved for loading. The lowest fine is now $10,000.
Income tax fines which were capped at $5,000, now range as high as $100,000, with the lowest fine now at $10,000.
Shaw, commenting on the Minister's figures, charged that the hole in the Budget was likely to be much higher, arguing that the actual increases in interest payments were closer to $8.1 billion, more than double the Finance Minister's figure, and that with the current salary negotiations under way, the country was faced with an increased wage bill of $17 billion over the next three years.
Dr. Davies had told Parliament on February 6 that there would be no new taxes when the 2002-2003 Budget was presented in Parliament in April and that the economy was expected to grow by 2 per cent to 3 per cent in the calendar year. On April 19, he told Parliament that, as promised, the Government would impose no new taxes to finance its Budget but said the taxman was going to get more aggressive next year.
