Dominica’s government presented an EC$1.3 billion budget to Parliament on Tuesday, outlining a variety of new taxes and stating that existing social programs to assist the disadvantaged will be maintained.
In his first budget statement to Parliament following the general election last December, Finance Minister Dr Irving McIntyre stated that recurrent expenditure for the fiscal year 2023-24 will be EC$639.6 million, with capital estimates of EC$701.6 million.
“I must emphasize that, while the recurrent budget for this fiscal year has been reduced, all of the government’s current social programs to support the vulnerable will continue, including the public assistance program, the foster care program, the care of our juveniles…our centenarian program, the 65 and over non-contributory pension program, and…the yes we care program,” he said.
McIntyre also stated that the Roosevelt Skerrit administration will continue to support non-governmental organizations that care for the most vulnerable, particularly senior citizens, and will begin implementing the recommendations of the recently appointed National Advisory Board for Health and Social Care of the Elderly.
He told legislators that “the expenditure estimates will be financed by tax and other revenue sources, loans, and grants totaling EC$1.3 billion, including recurrent revenue of EC$1.06 billion, capital revenue of EC5.5 million, grants totaling EC$138.4 million, and loans totaling EC$94.0 million.”
McIntyre stated that while Dominica’s economy is recovering from a number of climatic and exogenous shocks, the government’s fiscal position has not yet recovered from the negative impact of these shocks, particularly the two-year COVID-19 pandemic that occurred two and a half years after Category 5 Hurricane Maria.
“Some of the marks from the shocks are still visible. Our debt to GDP (gross domestic product) ratio, which was 68.3 percent in 2016, is expected to rise to 97.7 percent by the end of 2022. Meanwhile, debt servicing increased from EC$67.5 million in 2015/2016 to EC$116.6 million in 2022/2023.”
McIntyre stated that a 2% stamp duty on outbound payments made through money transfer companies such as West Union, MoneyGram, and JN Money Transfer would go into effect on November 1st of this year.
McIntyre stated that an increase in global security concerns has compelled countries to enhance regulation of financial institutions, as evidence has revealed that these organizations are vulnerable to criminal groups.
As a result, McIntyre said, the government has had to put procedures in place to improve oversight of the island’s financial institutions to guarantee they match international standards.
He stated that the yearly licence fee for operating an offshore bank covered by the Offshore Banking Act will be raised from US$8,000 to US$25,000 beginning January 1 of next year.
He also stated that the licence costs for insurance businesses would be increased to EC$50,000 on January 1, 2020, and that all credit unions that qualify to function under the Cooperatives Society’s Act would henceforth be required to obtain a permit to operate on January 1, 2024.
According to the Finance Minister, the license shall be renewed annually on or before December 31 of each calendar year. Credit unions with less than EC$25 million in assets must pay a licence charge of EC$10,000 per year, while those with less than EC$50 must pay a licence cost of EC$20,000 per year.
Credit unions with total assets less than EC$100 million but greater than EC$50 million pay a licence cost of EC$40,000 per year, whereas credit unions with total assets less than EC$500 million but greater than EC$100 million pay a licence charge of $60,000 per year.
The licence charge for credit unions with total assets of EC$500 million or more is $100,000 per year.
“In addition,” McIntyre stated, “we will raise the license fee for Money Service Businesses,” stating that “Money Transmission businesses will pay a licence fee of EC$15,000 annually, and Payday Advance businesses will pay a licence fee of EC$15,000 annually.” These fees will go into effect on January 1, 2024.
McIntyre recalled that the administration had announced during the previous budget presentation
That it would direct some of the cash generated by the Citizenship by Investment (CBI) program toward debt repayment, similar to how the Vulnerability Risk and Resilience Fund is managed.
He stated that the government established the Debt Repayment Fund in April of this year and that it will begin capitalizing it during the current fiscal year.
“In this regard, the government will levy a tax on investments made by developers of CBI-funded private sector developments.” The levy will be charged at a rate of $5,000 per CBI Programme investor.
“This levy will be payable after approval of citizenship and prior to the issuance of the Certificate of Naturalization to the investor and his/her approved dependents beginning September 1, 2023,” McIntyre stated.
Dominica is one of a few Caribbean countries that has a CBI program that permits international investors to get citizenship in exchange for making a significant investment in the island’s socioeconomic development.
McIntyre stated that the government will also introduce a new licensing structure for CBI program agents and promoters.
“With effect from October 1, 2023, the government will issue new licenses to qualifying agents and promoters.” These licenses will cost $15,000 per year for non-resident agents and $10,000 per year for non-resident promoters.”
The government also stated that the Excise Tax on alcohol and tobacco will be raised by 25 cents per litre and per kilogram, respectively, beginning September 1, 2023.
The administration has also stated that the Return Filing requirement for government employees whose complete taxable income is from employment will be eliminated.
He stated that the Inland Revenue will make the appropriate administrative measures to ensure that qualifying employees continue to benefit from the Income Tax Act’s tax deductions.
Fees for marriage and birth certificates will also rise on August 1, this year, according to McIntyre, who added that the current tax policy on petroleum products has been in place for about 20 years.
“Prior to the introduction of the excise tax, the consumption tax plus the sales tax on gasoline amounted to the same EC$3.00 excise tax per gallon of gasoline that we now pay, and EC$2.38 excise tax per gallon of diesel that we now pay.”
“In addition, the government reduced the EC$0.45 cent excise tax and customs service charge on liquefied petroleum in July 2008.
“Mr Speaker, we believe that the time has come to reconsider the tax regime on petroleum products.” As a result, the government will form a task force to assess the current tax rates and system, as well as make proposals for the implementation of a contemporary, equitable, and fair tax regime. “We intend to report the findings and recommendations of this exercise to Parliament by January 2024,” McIntyre added.
The budget debate will begin on Thursday.
