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We are once again pleased to highlight the major changes in the 2007 Budget, which we
believe would directly affect our clients and associates. The theme of the 2007 Budget is “Vision 2020: Moving Forward”. Government’s projections for 2007 are based on conservative oil and gas prices
with expenditure projected at $38.0 billion, representing a small reduction from the prior year. The 2007 Budget has been framed around an oil price of US$45
per barrel and a gas price of US$3.50 per MMTBU. With a projected oil price in the region of US$60, further transfers to the
Stabilisation Fund are expected over the next few years.
The Honourable Prime Minister noted that the economy continues to be very buoyant
with an internationally competitive energy sector, a manufacturing sector that is the strongest in the Caribbean and a financial
sector that, in his words, “is poised to take off”.
He noted that:- The economy has doubled
over the last five (5) years; Unemployment is at single digit rates; Foreign exchange market is bouyant; Exchange rate is competitive; There have been consistent balance of payment surpluses; There is a healthy build up of official reserves; Real GDP is projected to grow by 12% in 2006.
The above has however not been achieved
without a cost. It has been widely remarked that the economy is ‘nearing a boiling point’ and great care must
therefore be taken to prevent an inflation-induced bust. The reduction of inflation has therefore been identified as a major
priority for 2007, but the Honourable Prime Minister provided little by way of specific measures that will be employed to
achieve that objective.
The Honourable Prime Minister did identify the Government’s thrust towards the establishment
of new downstream industries to complement the now well established and expanding petrochemical sector, namely: Many people who
were hoping for an “election budget”, were faced with the following proposed measures: the curtailing of foreign used car imports; the increase in duties
on tobacco products; the increase in duties on rum, beer and other alcoholic products; the removal of online gaming; and the attack
on gaming generally.
Details of the fiscal policies that will affect your business activities for the coming year PERSONAL INCOME TAX Personal
Allowance of $60,000 per taxpayer retained; Increase in Tertiary Education Allowance to $60,000 from
$18,000 for children attending University abroad; Lump sum death benefit to be exempted only where pension plan is
approved; Human Resource Development Allowance of 150% of expenses incurred in training of employees to be withdrawn; No deduction to be allowed for
losses from any other source against income from employment or profession;
Corporation Tax Corporation Tax rates of 25% and
35% retained; Business Levy of 0.20% of Gross Income retained; Green Fund Levy of 0.10% of
Gross Income retained; Wear and Tear Allowance to be granted once taxes payable under the Land and Building Taxes have been
paid (not within the year of income to which the claim relates) Seventh Schedule of the Income Tax Act (Capital Allowances)
to be amended to include Buildings, Structures and Improvements completed on or after 1st January 1995 and Industrial Buildings and Structures under the Income Tax (In Aid
of Industry) Act acquired prior to 1st January 2006. Expenses incurred in the production of tax-exempt income
to be madenon-deductible for tax purposes unless expressly allowed under the Income Tax Act;
Customs/Excise Duties
Excise duties on locally produced tobacco products, and import duty on imported tobacco
products both increased by 15% with immediate effect; Excise Duty on locally manufactured rum, beer and other alcoholic products increased by 15% with immediate effect; Import Duty on rum, beer and other alcoholic products of Common
Market origin increased by 15%, while products of extra-regional origin increased by 30%; Telecommunications equipment required for internet and broadband services as well
as all computer peripherals (cables, speakers, mouse pads etc) to be exempted from import duty;
Value Added Tax
Stamp
Duty
SENIOR CITIZENS Senior Citizens Grant (formerly Old Age Pension) revised
and increased; Pension for retired public servants to be set at a minimum of $1,150 per month; After the Budget Debate the Prime Minister increased
pension by a further $100, bringing the total to $1,250 per month.
DIFFERENTLY
ABLED CITIZENS
Petroleum Tax Petroleum Profits Tax rate of 50% retained; Unemployment Levy rate of 5% retained; Supplementary Petroleum Taxes retained as per existing Table of Rates; No adjustment to allowances or incentives;
Other Reforms Funding
for small and micro enterprises increased from $50,000 to $100,000 and a second loan facility of up to $250,000 introduced; Importation and use of slot machines to be banned
with immediate effect; Online
gaming system to be eliminated in due course; Importation of foreign used vehicles
to be curtailed.
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