Little by little Grenadians are getting more and more information about the austerity measures that are contained in the Structural Adjustment Programme (SAP) that is to take effect from next January and to run over a three-year period.
Prime Minister and Minister of Finance, Dr. Keith Mitchell during a National Address late October announced that the Income Tax ceiling will be lowered from $60,000.00 to $30,000.00 per month, and that there will be an increase in property tax without giving specific details.
However, at a recent Social Partners’ Forum held at the Grenada National Stadium, Permanent Secretary (PS) in the Ministry of Finance, Timothy Antoine outlined what the increase in property tax will entail, and also gave additional measures that will be in the SAP.
Antoine disclosed that property tax on land will be doubled from the rate of 0.10 percent to 0.2 percent and the tax on residential buildings will also be doubled from 0.15 percent to 0.30 percent.
According to Antoine, the tax exemption on the first $100,000 remains as the Mitchell government looks to the Washington-based International Monetary Fund (IMF) for help to tackle the country’s financial woos.
Grenada has been defaulting on payments to international creditors since the Mitchell government came to power in February.
The island’s current debt stock stands at EC$2.4 billion, with most of it raked up by a former Mitchell-led New National Party (NNP) administration that ran the island from June 1995 to July 2008.
In his presentation, PS Antoine disclosed that tax for people with smallholdings will move from $20.00 to $40.00, or from $30.00 to $60.00.
He added that people whose agriculture land remains idle will be called upon to pay property tax.
Antoine said government views this measure as a means of getting the land under production.
At present, agriculture land attracts no taxes in Grenada.
The PS in the Ministry of Finance also stated that user fees will be addressed, and that there will be a reduction in tax exemption.
Lottery winners will also have to provide government with some of their earnings through a withholding tax.
Government is determined to impose Personal Income Tax on pensioners as part of the austerity measures in the SAP.
However, the Grenada Trades Union Council (TUC) is prepared to resist that move.
TUC President, Madonna Harford who also spoke at the forum indicated that pensions are meant to be tax-free, and that pensioners would have already paid taxes on their income.
She said TUC views the payment of taxes on pension as being unfair and unjust.
She spoke of some pensioners still having to service their mortgages and other financial obligations including student loans.
She said there are others who have to take care of their health by having to purchase expensive medications.
Harford stressed that some pensioners have also lost their retirement benefits, which were invested with some local and regional institutions.
This is an obvious reference to the dilemma created with the collapse of British American Insurance Company (BAICO) and the fall-out from the crash of the Trinidad-based CLICO.
The TUC President indicated that the SAP, to be implemented by the Mitchell government, will eventually bring hardships on salary earners and pensioners.
She said the lowering of the Income Tax Threshold will capture additional workers who earn in excess of $3,000.00 per month, in light of the fact that most of these people would have already entered into financial obligations.
Harford acknowledged the Trades Union umbrella body is aware that it is imperative for government to put measures in place to seriously address the grave fiscal imbalance facing Grenada.
As it stands now, from every dollar collected, seventy cents are used by government to pay salaries and pension and most of the rest of the dollar absorbed in debt payments.