BASSETERRE, St Kitts–Prime Minister Dr Denzil Douglas Tuesday presented an EC$528.1 million budget to Parliament outlining a reduction in corporate taxes as well as extending several incentive packages that his administration had earlier implemented in a bid to stimulate the economy of the twin-island federation.
Prime Minister Douglas told Parliament, which had been boycotted by the six opposition legislators, that there would be a reduction in corporate taxes 35 to 33 per cent, an extension of the Building Materials Incentive Programme that provides for duty-free concessions on imports on building materials for home construction as well as pursue the expansion of FREESH–a soft loan arrangement for first time home builders.
In addition, the Douglas administration hopes during the fiscal year to increase land distribution and accelerate infrastructure development in land distribution areas.He said that six investment projects had been approved valued at EC$300 million as a further stimulus for the local economy over the next five to seven years.
"They have the potential to stimulate growth within and between various sectors such as construction, tourism, wholesale and retail, and information and communication technology."These projects will also provide well-needed long-term job opportunities for persons in various fields of expertise such as landscape architects, web developers, graphic designers and mechanics," he added.
The budget presentation was originally due to have been delivered in January, but had been delayed after two government legislators, deputy prime minister Sam Condor and senior minister Dr Timothy Harris–failed to participate in putting the package together.The two former ministers were among the six legislators that boycotted the sitting.
Dr Douglas said that from this year all businesses, including those that are the beneficiaries of tax holiday will have to file annual tax returns."This will help us to determine the effectiveness of our tax policy regime and inform our decision-making process as we endeavour to ensure that the right sectors are the beneficiaries of our stimulus and growth programmes."
He said his administration has always welcomed sound recommendations that carry the potential to induce investment and stimulate economic output and last March introduced legislation that increased the amount deductible for management compensation from EC$60,000 to EC$75,000.
"This amendment provides a much larger deduction in the form of executive compensation for businesses from their taxable incomes," Dr Douglas said, adding that a second strategy focused on closing clear tax loopholes and modernising selected sections of the current Income Tax Act."I am now pleased to note that the closure of these tax loopholes has created some degree of fiscal space," he said adding "the question is, what should we do with this fiscal space that this strategy has created?
"Should we focus on providing more tax deductions or should we re-examine our tax rate for corporations which is said to be the highest in the Organisation of Eastern Caribbean States (OECS)?But he said the reduction in corporate taxes "will be applied to taxes filed in respect of business activities occurring in 2013."
He said that a serious issue facing the government is to develop policies aimed at stimulating the local economy adding "we have determined, however, that some of the key elements of our strategy going forward will include support for the construction sector, entrepreneurship, and education and skills training.
"I am pleased to update you, this Honourable House and the citizens of this country that we have not only developed the specifics of the programme which is called "Preparing People for Employment Project" (PPEP) but have successfully enrolled 2,795 young persons and placed 1 412."The majority of these persons have been placed in the private sector. Under this Project, focus will be placed on building vocational skills, social and life skills and entrepreneurship.
"PPEP is designed to target unemployed youths by providing training and internship opportunities to build skills necessary for the new economy. The core areas of training includes: building trades, beauty services, hotel and tourism, environment, renewable energy, agriculture and ICTs."
CMC