Dominica budget: More than half of workers could be lifted out of income tax bracket

The prime minister of Dominica has proposed changes to the island’s tax structure that could see more than 60% of the workforce no longer paying any income tax.

The news came as Roosevelt Skerrit – acting in his additional capacity as Minister of Fianance – addressed the National Assembly yesterday with what one commentator described as a “transformative” budget.

The prime minister emphasised that if the country is to capitalise on the investment made in human resources, the cost of living will need to be overhauled.

"We all know that adjusting to change can be challenging and the change we are seeking may be taxing on those who are less inclined to depart from the ways of the past,” he told MPs.

“What we are proposing will shift the central role of government and fully empower ordinary citizens to make more of the choices that will determine their future."

The opposition United Workers Party is due to give their response to the budget from 10am local time on tomorrow.

Themed “Realising a modern prosperous Dominica”, proceedings were delayed at the start due to a disagreement between the Speaker of the house, Alix Boyd Knights, and UWP member Joseph Isaac.

The Roseau Central MP stood for a point of clarification at the end of the Speaker’s statement, but was told he had missed his chance.

[caption id="attachment_4086" align="aligncenter" width="500"] Joseph Isaac stands his ground as he questions the Speaker.[/caption]

Standing his ground, Isaac said that he had in fact been stood earlier but Boyd Knights had failed to see him, at which point a series of angry exchanges began between the Speaker and the UWP politicians.

WIC News is unable to confirm whether Isaac was stood at the correct time, but if he was he should have been able to make his point.

During the heated back-and-forth, the Speaker called for the live broadcasts to end – although this didn't happen.

Pro-worker stance in Dominica

Prior to the session, President Charles Savarin delivered his address to the parliament.

He blasted the spread of fake news, which he described as a “dangerous journalist virus”, and objected to the “sense of cynicism” in which people label Dominica as undeveloped.

[caption id="attachment_4085" align="aligncenter" width="500"] President Charles Savarin addressing the the House of Assembly.[/caption]

Following that, Skerrit spoke for over two hours. The most striking element of the budget was the proposed tax amendments.

In an effort to seemingly relieve Dominicans who earn less than a middle income salary, the prime minister recommended to the fiscal policy panel that the 15% and 25% income tax bands be abolished as early as the next fiscal year.

Under this proposed system, Dominicans would only start paying income tax when their income reaches the 35% threshold, he said.

"In this move we will be saying to all, that Dominica is a place that does not penalise work and income,” he told the house.

“I wish to further ease the burden and enhance the cash flow of workers in Dominica, by increasing the minimum income tax threshold from $25,000 a year to $30,000 a year.

This means, Madame Speaker, that effective 1 January 2018, no person earning $30,000 a year or less will pay income tax and those working for more than $30,000 a year, will have the first $30, 000 exempted from income tax deductions."

Island of growth?

While other Caribbean nations with traditionally larger economies are reeling under the effects of increased taxation and austerity, Skerrit pledged to do the opposite by reducing financial strain on Dominicans and increasing their opportunities.

He pointed to Barbados, stating that they managed what he described as a “paltry” 1.5% growth last year, and following a tough, tax-heavy budget, that island's economy is likely to contract further this year.

The finance minister did acknowledged that some sectors in Dominica will need stimulation to help avert brain drain.

"We will not be prosperous without a highly skilled population... The region already has the highest tertiary education emigration rates in the world,” he said.

[caption id="attachment_3851" align="alignright" width="300"] Roosevelt Skerrit.[/caption]

“There is no point spending our public resources on developing skills, if the skilled then decide to go abroad and add their value and pay their taxes away from here.

"If we are to capitalise on the investment in these new skilled individuals, it will require a radical shake up of the costs attached to living and working in Dominica, taxes and licensing fees, energy costs, transport costs, financing costs."

---


Key Points By Emmerson Anthony, Dominca

Health

Along with the continuation of the national hospital project, other infrastructural projects carded for this financial year include the construction of three new health centres at Colihaut, Vielle Case and Bellevue Chopin and improved health infrastructure in Roseau and Newtown.

With funding from the UK Department for International Development, implemented by PAHO, in the amount of $5 million dollars, four health facilities (Laplaine, Roseau, Grandbay and Portsmouth) will be retrofitted as SMART Health Centres.

Education

To encourage study in the areas that the country needs most, Skerrit proposed to amend the guidelines under which education assistance is provided at the tertiary level.  This will include a review of the priority list used by the Ministry of Education and other institutions like the AID Bank and the Dominica Social Security to provide support.

The budget is set to assist persons intending to pursue studies in hospitality, hotel management, culinary arts, landscaping, carpentry, masonry, tile laying and other hotel maintenance services.

In addition, skills required in the manufacturing sector such as those of equipment maintenance officers, mechanical engineers and technicians are in high demand and this sector will also receive support.

Housing

The prime minister revealed that cabinet has given its blessing to the Dominica Social Security Board pursuing the development of a modern, upscale housing development for middle to high income earning couples.

He revealed that the government is keen to assist with the containment of prices and costs to potential beneficiaries and has readily indicated its willingness to assist with infrastructural inputs as well as duty waivers wherever possible to ensure delivery of high quality, attractive but yet affordable homes to this emerging category of worker in Dominica.

‘Making Our Towns And Cities Beautiful' Effective January 2018, the government will permit a one year relief of duties and other levies, with the exception of the VAT, on all refurbishment of commercial and residential properties in these two historic cities.

Tax waivers and exemptions apply to all approved building materials, interior and exterior wall finishes, roofing materials and pavement improvements.

Road and Infrastructural Works

The Ministry of Public Works and Ports is set to receive the highest allocation of the capital budget.

The majority of projects comprise continuing projects from 2016/17 representing priority interventions following the passage of Tropical Storm Erika.

Among the major projects to be undertaken by the Ministry of Public Works and Ports are:

• Roseau Enhancement Project.
• Rehabilitation works to the EO LeBlanc Highway (including the construction of three new bridges, financed largely through grant funding from the Chinese government)
• Rehabilitation works along the Nicholas Liverpool Highway
• Dredging of major rivers.
• Rehabilitation of Roseau Valley road and bridge network

Tourism

The Ministry of Tourism and Urban Renewal is allocated $17.8 million, which represents 3.1% of the budget.

This represents an increase of $3.5 million from the last fiscal year in the marketing budget to allow for increased marketing in major source markets, improved connectivity, and promotional activities leading up to Reunion 2018.

The increased allocation will also allow for expansion in community tourism, enhancement of various tourism sites and urban areas, and development of the yachting sector.