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Budget For Growth
From
The Chronicle
of 29 Jul, 2005
VAT, contentious outsourcing and 5% Public Service salary reimbursment were outlined as part of the $275.6 million Budget.
In his Budget Address spanning over two hours, Prime Minister Roosevelt Skerrit sought to highlight his government's move not to introduce new taxes for the financial year 2005/2006; while seeking to reassure that outsourcing moves to be taken in janitorial and security services, as well as a reduction in the electrical division, are necessary.
"This budget contains no new tax measures," he remarked. "In taking this decision government is demonstrating its confidence in the people of Dominica, that they will continue to show a sense of national responsibility and high level of productivity in their workplaces."
Government will also reinstate 5% to public servants, a move promised in his last Budget Address and will now take effect July 1. "This reinstatement will mean an additional $5 million to last year's wage bill," the Prime Minister reported.
Much anticipation had built up for this year's Budget Address, which some observers say was as a result of its apparent delay and also because this was the first Budget presented since PM Skerrit achieved victory at the polls.
The Prime Minister, who also holds the portfolio of Finance and Planning, chose to first make mention of his government's stabilization efforts, which he says had borne fruit with upward movements in the sales tax and international trade since 2002/2003. "What is left for us to do is to continue with fiscal vigilance even as we press on with programmes that will sustain this growth."
"The major planks of the fiscal framework going forward continue to be the public debt, the wage bill and the critical fiscal target, the primary surplus," said the Prime Minister. He lamented that Dominica's wage bill was "too high", totaling $106.5 million, and so needed to be reduced, with outsourcing and streamlining as the preferred methods. "The intention is to make the public service more efficient and less involved in services that the private sector can provide," he commented. To be affected from January 2006 are fifty-two employees providing security services, thirty-seven employees doing janitorial services in the Roseau area, most on a part time basis, and the Electrical Division which will be reduced as a consequence of the impending establishment of the Independent Regulatory Commission. A further twenty-one janitors will be released in March, and eighteen on June 1, 2006. Sea Port and Airport management will merge to form the Dominica Air and Sea Port Authority in January 2006.
The Prime Minister claimed that Government was ensuring the "fullest possible sensitisation" of those affected, and that in discussions held with those to be affected they were "not averse to the proposal of outsourcing", and gave a positive response.
However, the announcement of the expected implementation in March 2006 of the Value Added Tax took up much attention. Said PM Skerrit, "Vat will simplify the tax system in our country and will not have a negative impact on the cost of living, and will significantly reduce the cost of business".
More interestingly he revealed that, "If all things work to plan, government can possibly be in a position to reduce the personal income tax within the period of two to three years".
Of much interest to listeners of the Address was a wide range of projects budgeted for. These include $600,000 for work on the expansion of the Hospitality Institute of the State College, $54 million for the Roseau to Melville Hall road upgrade, which will see the widening and general upgrade of this major road making for a much easier ride to the Melville Hall Airport and other points in the North East and North of the country. Also budgeted for is a massive Roseau Road Reinstatement project costing in the region of $104 million when complete, some $17 million of which will go towards land acquisition. This project will be implemented in a phased manner.
In the area of economic and social infrastructure, the Budget makes provision for the Road Improvement and Maintenance Programme costing $20.5 million, with an allocation of $1.8 million in this fiscal year. Through this Programme, particular emphasis will be placed on the upgrade of the Roseau Valley roads because of their importance to the tourism sector.
The Bay Front Ferry Terminal will be expanded at a cost of approximately $750,000 to allow for rapid processing of travelers. An allocation of $0.9 million is included for completion of the Northern Education project which is ensnared in difficulty with the main contractor, and so a new contractor is being hired.
An allocation of $500,000 has been made available for a new Roosevelt Douglas Primary School, and $500,000 for a new Primary School in Salybia. Also provided for is bridging finance amounting to $0.5 million toward a Social Investment Fund to contribute to social protection and poverty reduction in the country, and $0.6 million for the construction of a new Health Centre for Castle Bruce.
Among many other projects budgeted for are a Business Gateway to provide services to our talented individuals with good business ideas but who do not have the resources to get a business established, completion works on the Central Livestock Farm at Londonderry and continuation of the Eco-tourism Development Programme.
In relation to VAT, Deputy Political Leader of the Opposition United Workers Party, Julius Timothy took issue with it when he gave The Chronicle his initial impressions on the budget. He says that the Prime Minister's claims of VAT being revenue neutral was false. "It's definitely a new tax and it is not meant to be revenue neutral, because the Prime Minister also said that he hopes to get so much from VAT that in a couple years he will be able to reduce income tax&VAT is clearly meant to bring in more revenue to the Government," he said.
He described the budget as "a lot of talk but no substance".
"For instance, the Prime Minister said it is a budget with no new taxes. Yet he announced a Value Added Tax which we've never had before, also an Excise Tax that we've never had before..."
It is very interesting to note that the said economy has not reached back to the 2000 level, because under this government we had a series of negative growth and right now they claim they have done a little catching up.."
Revenue is expected to increase to $234.2 million in 2005/2006, compared to $216 million in 2004/2005.The main sources of this revenue are expected to be Personal Income Tax ($29.9 million), Corporate Income Tax ($9.5 million), International Trade Tax ($93.7 million) and Sales Tax ($26.4 million). Many projects were earmarked in the areas of Tourism and Agriculture. The Chronicle will look further into these and other areas of the Budget in our next issue.
Parliament reconvenes on Tuesday, for debate on the Budget.
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