Leader of Government Business in the Upper House of Parliament, Senator Simon Stiell has dismissed the insinuation by Labour Senator Raymond Roberts that government is providing for the gradual destruction of the country’s tax base with Parliament’s approval of tax exemption bills providing for a 50% waiver for investors.
The Property Transfer Tax Amendment Bill provides for a 50% reduction in the property transfer tax payable by foreigners with qualifying investments from 10 to 5%.
The 5% rate would be applicable for non-citizen investors with qualifying costs not exceeding $30 million.
The rate of 5% is applied by a 50% waiver on the 10% prescribed by section 5 (1) (d) of the principal Act.
In addition, the Income Tax Amendment Bill provides for a 50% waiver on withholding tax to an investor with a qualifying investment in tourism accommodation or health and wellness with qualifying costs exceeding $30 million but not exceeding $80 million.
In the case of qualifying costs exceeding eighty million dollars, there is a 100% waiver of withholding tax on interest charges for the purpose of financing the qualifying investment, and on royalties, in correlation with the measures laid out in the Value Added Tax Act.
Additionally, according to both Bills, if the investor fails to invest the requisite value of the qualifying costs upon completion of the project or within the period specified in an investment agreement for the purposes of the qualifying investment, the investor is liable to pay to the Comptroller of Inland Revenue the waived withholding tax and the payment must be done within two months of the deadline to satisfy the obligation.
Sen. Stiell noted that the Income Tax (Amendment) Bill 2016 would be applicable on specified types of repatriated funds relating to investors engaged in tourism accommodation or health and wellness.
This amendment, he said speaks specifically to providing a boost to the Agriculture sector, which is considered as a major pillar in the country’s economy and contributor to the overall Gross Domestic Product (GDP).
Both amendments were approved during the last sitting of the Upper House where a suite of bills geared to attract more investors to the country were presented.
Sen. Roberts voiced concern that by providing these exemptions “we are eroding our tax base,” also noting that these tax immunity are being offered as an incentive to foreign investors at a time when the workers of the country are being asked to pay more taxes.
Sen. Roberts called for greater recognition of “the hardships that the workers are enduring,” adding that “workers are today paying in excess of $52 million in personal income tax.”
He also pointed out that “the private sector or corporate tax in the last two years (has moved) from $37 million down to about $32 million.”
“Don’t be deaf,” Sen. Roberts declared, adding, “while we in the labour movement appreciate the fact that there is clarity (in the bill)…we ought not to get lost.”
He urged government to “take note that you are eroding your tax base (as) these people (the investors) would be using the (nation’s) roads, hospital services, recreation (and) just about everything (else).”
Sen. Stiell responded by insisting “it is important to find alternative measures to pay our bills.”
“This isn’t about cheap politics, it’s about a directive to the real problems we face, making difficult decisions…and we have been very open and transparent about it,” he told the Upper House.
“We are doing the right thing,” he said, pointing to the “increase in the amount of economic activity that is taking place” in the country, and the “jobs are being created… contributing to a reduction in the unemployment figure.”
In presenting the 2016 budget, Prime Minister and Minister of Finance, Dr. Keith Mitchell acknowledged that there was an increase in the unemployment figures in the country.
He said: “According to the preliminary results of the 2015 Labour Force Survey, the rate of unemployment in Grenada is now 30-40 percent slightly up from the 28.9 percent recorded in 2014. This slight increase is due to a higher labour participation rate as more persons particularly women are now seeking employment”.