Come January 1, 2018, Dominicans earning less than $30,000 a year will not be paying income tax as the government moves to increase the minimum income tax threshold from $25,000 per year to $30,000.
Speaking during the presentation of the 2017/2018 Budget at the First Meeting of the Third Session of the Ninth Parliament on Thursday, Prime Minister, Roosevelt Skerrit reported that the government will be directing a National Fiscal Policy Panel to consider and advise on the abolition of the 15 percent and 25 percent income tax bands in the next fiscal year.
He proposed the formation of the National Fiscal Policy Panel (NFPP) to be made up of three independent experts with outstanding international reputations to provide the Government, Parliament and the nation with independent economic advice on matters relating to tax and spending policy during this transformation. Part of its job will be to advise the Government on economic and fiscal policies.
According to Skerrit to achieve the bold vision enunciated in the presentation, the country must have a tax system that incentivizes employment over consumption and income over idle assets.
“We shall be directing the National Fiscal Policy Panel to consider and advise on the abolition of the 15% and 25% income tax bands as early as the next fiscal year,” he announced. “Under this proposed system, Dominicans would only start paying income tax when their income reaches the 35% tax rate.”
This, he said, is a major, bold move.
“By this measure, we will remove from the payment of income tax, all Dominicans earning less than what can be termed a decent middle-income salary, and all of those earning more will only pay tax on their income above this level,” he stated. “In this move we are saying to all that Dominica is a place that does not penalize work and income.”
He went on to say that the most important aspect of this change would not only increase incentives to work and earn, “but it would also serve to simplify our tax system with only one rate of income tax.”
He mentioned further that the National Fiscal Policy Panel will be charged with the responsibility of advising on this measure, “and I would hope to be in a position, as of the next fiscal year, to gradually introduce this new income tax structure.”
“In the interim, however, Madam Speaker, I am aware of the great relief that our tax structure, as modified over the last seven years, has brought to hundreds of Dominican workers in the public and private sectors,” Skerrit added. “We have moved the income tax threshold from $15,000 to $25,000 and this has aided many.”
However, Skerrit said he still does not believe it has assisted enough employees on the island.
“ We shall await the advice of the experts, but in the interim, I wish to further ease the burden and enhance the cash flow of workers in Dominica, by increasing the minimum income tax threshold from $25,000 per year to $30,000 per year,” he noted. “This means, Madam Speaker, that effective 1 st January 2018 no person earning $30,000 a year or less will pay income tax and those working for more than $30,000 a year, will have the first $30,000 exempted from income tax deductions.”
He revealed that this measure is not being funded by debt but by adding a new feature to the Citizenship by Investment Program.
“Madam Speaker, in the medium-term we expect to replace this loss of income by adding a new feature to our successful Citizenship By Investment Programme,” he said. “We are examining a plan to encourage some of our new citizens who do not reside in Dominica, to consider becoming tax resident here.”
According to Skerrit the advantage for them would be a tax identification number which is increasingly becoming a requirement for carrying out international business.
“Our new citizens have already passed a thorough due diligence exercise and for those wishing to become tax residents here without being resident in Dominica for the normal requisite time, we may give them the option of becoming tax residents as long as they pay a minimum amount of income tax,” he stated.
This he said would serve a number of purposes.
“Most importantly, it would ensure that our engagement with our new citizens is deeper and more continuous,” he said. “But it also has the potential to provide a substantial amount of additional revenue annually.”
Additionally, he stated, “ It is likely that this new proposal, which must be designed carefully so as to maintain the integrity of our existing programme, could yield more than the $34 million raised last year by all of our existing income taxes.”
Skerrit said his government is excited that this proposal would graduate the CBI to a new level, from a programme based around an initial investment to one where there is a constant flow of annual taxes from new citizens.
“As soon as we are satisfied that we have the right design and have fully assessed the costs and benefits and the risks and opportunities we will bring it to Parliament,” he revealed.
hmmm obviously some people excited about this but i feel they’re sugar coating something——guess we’ll find out what it is eventually huh?
and people’s bonuses what they worked overtime for shouldnt be taxed!
great news – however Mr. PM – i would like to further add that the transfer fees on real estate transaction to be reduce to 5% presently it is 10.95% (which includes legal fees plus VAT).
Presently to for a Dominican to buy a property the fees are as follows:
4% Stamp Duty
2.5% Judicial Fees
1% Assurance Fund
3% Legal Fees (+15% VAT)
It is very difficulty if a young family want to buy a house because the fees makes it much higher. I would like to suggest that Government do away with all these fees and make it one fee of 5% of the price. This would ,make it more affordable for people to buy some of the houses that are for sale for years with no buyers. Thereby creating activity in the real estate industry. The fee for non Dominicans can remain as is – this will help safeguard against Non- Dominicans buying all our lands. Once the real estate industry is moving every other sector will move as a result and Government will win in the end. So much winning – we will…
@%… 100% in agreement…. SKERRIT MUST GO NOW
Boy roosvelt your mal vat u put on us u have to remove. I are too modarah?
Lower tax does not mean HIGHER salaries !!!!!!!!!!!!!!!!!!!!!11
Skerrit says: “In this move we are saying to all that Dominica is a place that does not penalize work and income.” That is an absurd statement. Because If you make over $30K then, suddenly, DA will penalize you for work and income?! He also talks about providing an incentive for work over consumption. But income tax has never been a disincentive to work. I know of no unemployed person who would not accept a job because income tax would be deducted. Earning $25K tax free is already very generous so to increase that tax break to incomes of $30K is irresponsible. DA cannot afford that. Indeed, paying a huge tax of 35% on $30,001 which equals to $12,250 means that you will take home only $22,751. But if you make $30K you will take home $30K. Doesn’t that create a disincentive to make more money? Workers will be better off to stay at making $30K until their salary increases to $46,152 because at that income they will reach the point of indifference – {continued below}
continued from above———because at that point their take home pay will be the same as a worker making only $30K. Workers would be better off not accepting salaries that are between $30K and $46.1K because their net pay will be less than if they stayed at $30K. Skerrit needs to seriously reexamine this wrong-headed income tax policy.
OOPS! I made a boo boo. The tax on $35K salary is only $1,750. So I take back the last couple sentences above. But I still hold that the $25K tax free salary is already very generous and the country cannot afford to have that be increased to $30K. DA’s tax base is too small for that. My apologies for the error above.
This is not fair. if they are citizens of Dominican, entitled to everything that I am entitled to, including voting, then they should be entitled to the same level of taxing as me…Equality you want to give them, so no special treatment where tax is concerned.
The same was done in Antigua by the present opposition gov’t so this is not a new thing…stop fussing over everything and embrace change for crying out loud…
Brilliant Move Pm !
Are these guys crazy? How about simply Lowering the tax on all making below 30k to 5% and keep making income to help your gov’t?
Skerrt it is more than obvious you have money like Saudi Arabia to suggest ur tax reform. DA already has phony tax system.
The Saudis have oil so we have passports to buffer the in earned income from tax?
Ok, I forgot advisor NKomo’s office is located somewhere in the middle East
The way I read this it would mean that whith the 15% and 25% tax bands abandoned people will start to pay income tax at 35% on incomes over $35,000. In reality that is worse. Secondly, the reference to idle assets tells me that he is planning a wealth tax on things like land holdings, even if the owners have no income to pay such a tax, giving the government the opportuniity to acquire such assets through forfeiture. We have to be very careful. I have especially in mind the unsaid, but planned expansion of Portsmouth.
Yup. Sadly, though these type of practises by the government rarley bode well for property owners at the very least it would encourage them to put their property to work. There are too many abandoned properties all over the island creating stagnant blotches all over a country thast is already progressing at such a slow rate. And there is demand for a lot of these properties but in many cases a combination of greed and stupidity is preventing the owners from taking advantage of them.
This is a all inclusive budget. Something to benefit everyone. What a budget. a lot of effort and intelligent thinking went into this budget…… best budget ever.
Good job cabinet.
You know brother. I used to support labour and then I really became disillusioned and remained neutral. But I heard and watched that Lennox Linton perform in the House this morning . So cool man, totally in control of his facts, not picking small points to fight with with Skerrit but covered all bases with sound logic and analysis. Even coming with an alternative manifesto. Skerrit looking like an angry stammering, incoherent amateur, a fish dead in the water compared with that. I am impressed, I watched even the Speaker giving close attention to this virtuoso performance. I will definitely vote for that guy next time. Give him a chance, what can we lose?
I am with you.
He deserves a chance.
This guy keeps fighting for the country when everyone else is running away
Ask Antiguans what they lost
This is not a bad move but the unemployment rate is so high it will only contribute in a very small way to the overall revenue collection of the country. Those idiots in the DLP needs to use our CBI money to grow the economy, AND CREATE THE ENVIRONMENT FOR PEOPLE TO GET EMPLOYED, instead of wasting it all over the country to buy votes. Our former diplomat NG LAPSENG, SKERRITS VERY GOOD FRIEND WAS FOUND GUILTY IN US fEDERAL COURT on bribery charges. This news is even bigger than this things Skerrit and his acolytes call a budget. Hope Skerrit is not overly disturbed over LAPSENG’S CONVICTION,, and he can still listen to LLL, patriot #1 Leader Lennox Lintons presentation.
SKERRIT MUST GO
SKERRIT MUST GO
SKERRIT MUST GO NOW