No new taxes included in 2020 Budget

Persons in the tourism, hospitalities and fisheries are all set to benefit significantly from the concessions in this year’s Budget.

And unlike in previous years, the 2020 Budget Address does not include any increase on taxes but rather increases in fees across several Ministries and Departments.

Finance Minister, Camillo Gonsalves delivered the Budget Address in Parliament yesterday, Monday February 2, where he announced steps which the government intends to take to “address potential bottle necks to our accelerated developmental roadmap”.

The first of these steps is to offer a 90 per cent waiver of customs duties on tour buses less than three years old with more than 26 seats.

The Finance Minister said these size buses are in short supply and seriously constrain this country’s growing cruise sector.

“Similarly-sized buses that are between four and 12 years old will receive a 75 per cent duty waiver. These duty waivers are conditioned on the exclusive use of these buses for tours and charters during the cruise season,” he said.

“Out of season, there are no restrictions on use. Local banks have also signalled their willingness to modify their loan packages to make payments less onerous during the off-season.”
Similar concessions will also be given to yachts and marine vessels used to offer tours.

In his address, Gonsalves said that these watercraft will now receive a 100 per cent duty waiver and be subject to the the same flexibility displayed by the banking sector for tour buses in the case of loans.

The Finance Minister also said that consultations in the construction sector revealed a potential shortage of heavy trucks as an impediment to the implementation of the Government’s upcoming capital programme.

“Last year, we reduced excise taxes on those trucks from 60% to 55% in an effort to incentivise fleet expansion. The data suggests that this reduction was insufficient,” he said.

“As such, Budget 2020 reduces the excise tax on heavy duty trucks from 55% to 30%. We encourage contractors and truckers to prepare themselves for the imminent construction boom.”

The fourth concession comes in the fishing sector where fisherfolk are eligible to receive, on application, a 75 per cent waiver of duties and VAT on fishing vessels and engines of up to 115 horse power.

Conditional duty exemptions are also permitted on a wide array of ancillary items of fishing equipment and accessories including nets, seine twine, line-haulers, pot-haulers, capstans, winches, trolling gurdies, safety gear, hooks, lures and materials for sail-making.

“For persons who may wish to purchase larger long-range fishing vessels, duty-free concessions are usually provided in keeping with the Government’s policy to encourage investments in vessels that enable fishers to remain longer at sea and increase their catch,” Gonsalves said.

The fifth concession comes in the local hospitality sector and, according to the Finance Minister, “any person who is registered by the Ministry of Tourism can access various concessions to facilitate the development of their hotel plant”.

He said these concessions cover hotel improvement, expansion and construction, and allow the investor to receive duty free concessions on all or some building materials, hotel equipment and furnishing.

“In addition, depending on the number of rooms being developed, an investor may receive income tax exemption for a period not exceeding fifteen years. Depending on the size and type of investment, other concessions, like food and beverage exemptions, are available,” Gonsalves said.

These concessions will also extend to ancillary services including restaurants, bars, tour buses and businesses that cater to the needs of the visitor, aimed at enhancing the visitor experience and increasing the visitor spend locally.

The Finance Minister also announced several increases on some user fees across the public service and the introduction of additional fees for new services being offered by various ministries and departments.

He said a number of Maritime Administration fees will be increased for services such as the issuance of various licences, certificates of safety and seafarers’ certificates.

And new fees will also be collected for the survey and inspection of different types of vessels.

Additionally, fees paid by overstayers, persons seeking an extension of stay and for new passports will be increased in 2020.

“Passports for children under 16 will move from $80.00 to $100.00, while passports for adults will go up from $150.00 to $200.00. Overstayers fees and extension of stay fees will be increased from $25.00 each to $100.00 and $75.00,” Gonsalves said.

He explained that the government, during the 2019 fiscal year, entered into a new agreement with Canadian Bank Note for the upgrade of hardware and software required for the smooth operation of services and for the introduction of a 48-page e-passport which has enhanced security features.

And the new contract, which spans a seven-year period, amounts to $18.45 million.

The Finance Minister said that the government currently subsidises the cost of passport fees by 60 per cent and the increase is aimed at improving the cost recovery for the service.

User fees in the Ministry of Agriculture, Forestry and Fisheries will also be increased in 2020.

These fees relate to, among other things, fishing licences, the cost of day- old chickens, and the purchase of chainsaws.

Within the Health Sector, an increase will also be effected in several hospital, laboratory and dental fees paid by private patients at the Milton Cato Memorial Hospital.

“At the Milton Cato Memorial Hospital, new and additional hospital and laboratory equipment has been purchased. The end result of all these investments is an improved delivery of health services to the citizenry,” the Finance Minister said.

“In 2019, the fees collected at the Milton Cato Memorial Hospital as a percentage of the amount spent at that institution alone, amounted to eight per cent. Clearly, a cost recovery ratio of eight per cent is quite low.”

Gonsalves added that fees paid by public patients, who make up the majority of persons accessing these services, will remain unchanged and the budgeted cost recovery ratio is expected to settle at nine per cent in 2020.

Parliament resumes at 9am today, where Dr Godwin Friday, the Leader of the Opposition, will make his response to Budget.