A wider cross section of the Grenadian population will now have to pay Personal Income Tax from as early as January 2014.
The much anticipated lowering of the Income Tax ceiling was revealed last week Wednesday by Prime Minister Dr. Keith Mitchell during a national broadcast.
Dr. Mitchell disclosed that the ceiling, which currently stands at $60.000.00 per annum, will now be lowered to $36,000.00 as part of what he termed a “Home-Grown Programme”.
The Income Tax rate will be reduced to 15 percent for persons earning less than $60,000,00 per annum.
The rate of 30 percent will remain for persons earning more than $60.000.00 per year.
Dr. Mitchell declared that there will also be some adjustments to property taxes, details of which he did not provide.
Speculation is rife that most of the austerity measures will be announced by the Prime Minister when he delivers the 2014 budget on December 6.
In his address that lasted almost 30 minutes, Dr. Mitchell said the structural adjustment programme will be for a period of three years beginning in 2014 and runs up until 2016.
The Prime Minister indicated that the “Home-Grown Programme” being introduced by his ruling New National Party (NNP) administration should be seen as a time for “shared sacrifice” and that it was not being instituted by the Washington-based International Monetary Fund (IMF).
“We do not need the IMF to tell us that we are spending more than we collect… However, we do need the support of the IMF and members of the international community to provide financial and technical support to secure Grenada’s public finances,” he told Grenadians.
According to Prime Minister Mitchell, each month the government has been spending more than it is collecting in revenue.
He said the single largest government expenditure is the wage bill.
“The success or failure of the “Home-Grown Programme” is directly linked to the issue of the government wage bill,” he added.
It was pointed out that seventy cents of every dollar collected are used for salaries and pension.
Dr. Mitchell who also holds the portfolio of Finance said this imbalance is the factual basis for the country’s high debt and high level of unpaid claims in the Treasury.
Grenada has not been servicing its national debt of EC$2.3 billion dollars, since April with most of its raked up during the earlier period of NNP rule from 1995 to 2008.