The government of Dominica will be reviewing the island’s tax regime which could see the entire system being changed, prime minister Roosevelt Skerrit has said.
Delivering the annual budget on Wednesday, Skerrit said the process will begin with a review of the income tax system.
“It is the view of Government that the tax structure should always be relevant to the needs of the country,” he said. “As such, we have initiated a process whereby we propose to undertake a review of the tax system beginning with another review of the income tax regime.”
He noted that the Caribbean Technical Assistance Centre (CARTAC) has indicated a willingness to assist government in this process.
“It is likely that the entire system may be changed,” he pointed out. “For example, we could opt to set a flat rate of income tax which may make administration and calculation simpler. We will engage the relevant stakeholders in this exercise,” he stated.
Meanwhile, the prime minister announced that there will be an increase in the non-taxable income allowance from $20,000 per annum to $25,000 per annum.
The new measure will come into effect on January 1, 2015 and will result in some 1,508 people no longer having to pay income tax.
“As a result of this policy anyone earning $25,000 and less per annum or $2,083 or less per month will not pay personal income tax. This equates to an additional 1,508 people who will no longer pay income tax,” the prime minister explained. “For those who will continue to pay tax, this measure also results in an overall reduction in the tax paid.”
He pointed out that a person earning $2,500 per month is now paying $125.00 per month in income tax but with the increase in the non-taxable personal allowance, the tax to be paid is estimated at $62.50.
“A person earning $3,500 per month is now paying $291.67 per month and will pay $212.50 per month with the change. A person earning $6,000 per month is now paying $933.33 per month and will pay $812.50 per month with the change. A person earning $10,000 per month is now paying $2,333.33 per month and will pay $2,187.50 per month with the change,” Skerrit stated.
The prime minister said that the measure will equate to salary increases for public officers.
“For the public officer who earns $2,500 per month, the value of the benefit from this measure equates to the value of a 3.0 percent salary increase,” he explained. “For the officer who earns $6,000 per month, the value of the benefit equates to the value of a 2.0 percent salary increase.”
He noted that the measure will cost the state $5.3-million and “is largely intended to help families meet their needs.”
“We believe that if it results in greater satisfaction and productivity, the cost to the State will be less in real terms than the amount I have just quoted,” Skerrit remarked. “I therefore ask all employees in both the private and public sector to make this measure worthwhile.”
The prime minister also announced that as of October 1, 2014, “all persons 70 years and older, with no known source of income, or whose income is less than $200 a month, shall be entitled to a Cost of Living Grant of $200 a month.”
“This initiative shall continue until such time as a more permanent system can be effected for the benefit of those who have contributed over the years to the development of our country,” he noted.
Skerrit reiterated that the Value Added Tax (VAT) “is the backbone of our revenue” but the government has decided to remove the tax “on the service charge which is charged by the hotels.”
The tourism sector had earlier called on the government to reduce the VAT on the industry, arguing it will make Dominica more competitive.
“A service charge is commonly added to the services offered by a hotel,” Skerrit stated. “The service charge is not a government tax or fee. It is the view of the tourism sector that the application of the VAT to the service charge makes Dominica less competitive. Effective 1st September 2014, the VAT will not apply to the service charge. We hope that this measure will have the desired effect of making Dominica a more competitive destination.”
The Prime Minister announced that there will be a reduction of import duties on baby wipes, adult disposable diapers and computers.
See a copy of the entire budget presentation below.
A flat tax is a give away to the upper income bracket. Those who can already manage new cars, huge homes and send their kid to college comfortably, should not be in the same tax bracket as those who struggle every day to make ends meet. Lower income folks will have a little more to buy another pair of shoes while upper class folks will have thousands to stash away.
A progressive tax should remain. To whom much is given, much is expected. A flat tax makes the rich super rich while the poor gets poorer because increased utility and grocery bills will hit like a ton of bricks to make up for the shortfall in government revenue. Will the real Labour Party please stand up?
That fing prime minister dat playing like he care so fing much about de country but he doe give a dam
Nobody talked about ENVIRONMENT, CLIMAT CHANGE…..
Wake up people, Dominica signed the 2020 UN Program, Dominica get grants from the World Bank to implement it and nothing, not a word about it……….
Whosh Alas even your baby you put something for inthe budget ref papmpers . way papa what a budget.
Alas even your baby you put something for in your bedget lol lol
The increase in non-taxable income so that persons pay less tax is a good measure. It results in more disposable income. It might be just $60 but that is $60 I did not have before. I hope that next year the level will be raised to $30,000.
I also support the removal of VAT on service charge. It made no sense to be taxing money that is not income to the hotel.
I am trying to listen to the presentation of Hon Johnson Drigo,,,,He says fertilizer in his constituency was distributed by the farmers themselves…. They even know the farmers better than the agricultural unit. That proves that the destruction of structures is consciously or sub-consciously being destroyed by the Labour Party regime…… What a shame? Dominicans take note TIME HAS COME…….
The other day he is going to implement policies to have elderly and the infirmary handover their pension and land to the state or whoever, today he is going to give the same elderly $200 and $25 top up. (What double standard is that) On another note, such a program should be handled by the welfare division and not constituency office. What nonsense is that for me in that country nor?
I am living in the US for 27yr and sometimes i tap into DNO’s site for some jokes. For sure i will not vote in the 2015 election. I guess some of my United worker party supporters in Domincan have a better understanding of a budget without actual number, than a budget with numbers. What a bunch of idiots.
Dominicans don’t want to pay for anything. If they got zero tax they would complain about the roads not being fixed. Who will pay for schools on zero tax? No matter what you give, it is never enough. I mean more can be done but what he said is basic economics. Tax is a vital part of any economy. The govt of countries collect tax in order to pump back into the economy. Although dca is a special case cos sometimes the govt taking what the hell they want from the public purse. But at the same time, if we want good rods, schools, a system for our elderly, a system for people who are jobless, then tax is only healthy. I don’t support the single rate tax but I am waiting to see if it is a single rate for certain earnings. Eg, if you earn 25000pa, tax = 20%. If you earn 50000pa, tax = 30%. Etc. we must pay tax else teachers, police, roads and other free things that Dominicans TAKE FOR GRANTED. It’ll disappear. Think we pay a lot for health? To to America. Think we pay high taxes? Visit Europe. Some of us pay no taxes because we get paid cash in hand. Yet I get some of these people are still here disgruntled that tax has risen.
I meant disgruntled that tax had risen. And lots of typos but the picture is clear.
Thanks TF and Team Dominica for making this bold recommendation. The PM has no choice but to follow.
What is $60 deduction on my tax, Mr Skerrit. I pay 1% increase every year to Social Security, out of that $60 I will pay $9 in VAT. I suggest you take off the tax for the next five years on personal income and allow people to have spending power. You will see the vast difference in the whole economy.
you actually pay 0.25% increase every year and not 1%…
Tipapa you are not serious. VAT is the backbone of the economy and income tax is mouth of the economy. The economy is comatose. What I would suggest is that all the missing money from passport sales and diplomatic positions be brought back to the treasury. Bring the money in from Cayman , Monaco, and Switzerland. Also let those crooked lawyers pay their taxes. I know what I am talking about – believe that
Where will the Government find the money to spend on the services it proves…like….police, fire, health and education. Taxes need to be collected, but how much? That is a debate that will never end. In reality everyone simply wishes to pay $0.
The PM said in his budget speech “For the public officer who earns $2,500 per month, the value of the benefit from this measure equates to the value of a 3.0 percent salary increase,” he explained. “For the officer who earns $6,000 per month, the value of the benefit equates to the value of a 2.0 percent salary increase.”
One question to the PM, are these measures only for public officers or the entire nation?
Please Mr. PM, that is not the same thing as a salary increase for Public Officer because they are not the only ones benefiting from this measure. If I go with your argument, then you are giving all Dominicans that qualify a salary increase? Interesting!!!
If the Public Officer were given a salary increase that would compensate for cut in their salaries some years ago and then the they would see the real benefit of the increase in the personal allowance.
That measure will not fool the Public Officer because they are smarter than you think.
So by your argument, this can only count as a salary increase if other employees outside the public service do not benefit from the reduction in the amount of tax they pay.
Don’t you see a net benefit in having an across the board reduction so there is more money to spend in the economy?
Allyou Dominicans not easy papa.
a pamper and top-up budget, NO GROWTH FACTORS, DOMINIQUE FINI BAT.
Mr. Skerrit really believe some of us are fools? How the heck you can reduce tax and say is a salary increase? Papa met! What really is going on in this country?
He said its like the equivalent of a salary increase because you get a bigger paycheck. Too much blue covering your eyes you cant read properly.
Thanks for the correction. But I did not go to school in the summer. My salary cannot increase by 3% and the base amount have not moved. By the way, who said anything about being blue?
In Dominica, is either you are considered a Blue Donkey or a Red Donkey. No Horses here.
Well…apparently …the cap must fit …. If the change results in an increase in ‘take home’ pay it is an equivalent of an increase in pay if the tax rate had not changed … not sure what is so difficult to work out here.
Let us be mindful of the saying: “it is better to be thought of as a fool than to open our mouth and remove all doubt”
This is what the article says:
“A person earning $3,500 per month is now paying $291.67 per month and will pay $212.50 per month with the change. A person earning $6,000 per month is now paying $933.33 per month and will pay $812.50 per month with the change. A person earning $10,000 per month is now paying $2,333.33 per month and will pay $2,187.50 per month with the change,” Skerrit stated.
The prime minister said that the measure will equate to salary increases for public officers.
“For the public officer who earns $2,500 per month, the value of the benefit from this measure equates to the value of a 3.0 percent salary increase,” he explained. “For the officer who earns $6,000 per month, the value of the benefit equates to the value of a 2.0 percent salary increase.”
It seems pretty basic to me… If your base salary remains the same, and you remit less taxes to the government, then the amount of money to take home will be higher. This is the reason there is a value of the benefit which equates percentage increase in the money you take home as your salary.
Let us think before we speak…
I hope you don’t vote. If you can’t see the reduction in tax is a salary increase. I have no clue how you can understand more complex issues that will be for the betterment of our society.
Are they only considering income from employment as income? Don’t know, just asking. Reason being, it would not make a whole lot of sense to be paying a 70 year old the $200 per month if they have a steady income stream from investments which may escape the tax man’s net.
I printed my copy and the budget and the terms are clearly stated:
“I propose therefore, that effective 1st October 2014 all persons 70 years and older, WITH NO KNOWN SOURCE OF INCOME, OR WHOSE INCOME IS LESS THAN $200 A MONTH, shall be entitled to a Cost of Living Grant of $200 a month.”
you are most welcome
Well I got my bit improving our town. My next option is the Sports minister to look at the Sheds in the parks. Those who don’t approve of the budget are well behind time. prudence minister of finance we are almost there come October 1,all smiles and contemptment
The PM is sick in his head that’s all I have to say. How do you grow an economy by cost the country over 5 million. I support not tax the the 70yr old. Flat tax mean that the PM and his regime will be in the same tax bracket as someone making $3000 a month. let’s be realistic Mr. PM
Go Mr skerritt move ahead with the world. This is the only way forward.
******WHERE IS THE GROWTH*******
“He noted that the measure will cost the state $5.3-million and “is largely intended to help families meet their needs.”
The prime minister also announced that as of October 1, 2014 “all persons 70 years and older, with no known source of income, or whose income is less than $200 a month, shall be entitled to a Cost of Living Grant of $200 a month”.
……………………………………………
But how is the state going to pay for all this without growth?
This is what we must understand. If we don’t have money for salary increases then we should not have money for new payments that are not directed towards growth.
It would be better to use this measures as tax incentive that can promote and trigger growth; manufacturing,small business,agriculture and the likes.
When growth is promoted by incentivising the system and infrastructures, eveyone wins!!! Growth will create new jobs and even better wages.
Will all this new money be made up by grants? The government knows the country is not growing but yet we are creating new payments.
I understand some families really need this tax breaks but we can’t pay our way in hopes of a better economy!!!
Still, best wishes for us all!
-Thanks
I agree 100%
Well, I guess the plan is that the extra income that people will now have will be collected through VAT at businesses. This too will be a stimuli in the economy as businesses see a greater rate of depletion in their inventory or greater demand for their services.
Mr man pack up and GO you have SCREWED up enough LORD we can’t take it no more save Dominica and it’s people from the hands of Hamas