Prime Minister Roosevelt Skerrit on Tuesday presented an EC$437.6 million dollar tax-free budget to Parliament saying that the Value Added Tax (VAT) which was introduced in 2006 is a platform for revenue and has to be preserved.
“Some persons have asked for the VAT to be reduced, others want it done away with all together. But I believe Madam Speaker, that generally, the majority of citizens have accepted that the VAT is the most equitable and reliable form of indirect taxation available to us at this time,” said Hon. Skerrit who is also the Finance Minister.
Prime Minister Skerrit said that recurrent revenue is projected at EC$369.8 million with recurrent expenditure, (exclusive of debt amortization of $41.6 million) is estimated at $322.8 million thus projecting a current account surplus of $47.0 million for 2012/13.
He said that the government expects to receive revenue totaling EC$122.5 million from the Value Added Tax (VAT) while other domestic taxes are projected at EC$67.055 million dollars.
The Finance Minister also said that international trade taxes are estimated at EC$68 million while personal and corporate income taxes are expected to contribute EC$58 million dollars.
Revenue from other non tax items is projected at EC$53.559 million, Hon. Skerrit said.
He said that of the EC$364.4 million recurrent expenditure budget, EC$134 million would be spent on salaries, wages and salaried allowances.
Prime Minister Skerrit said reviews by reputable regional and International institutions such as the Caribbean Development Bank, the international Monetary Fund and the World Bank as well as other development partners, indicate that Government’s prudent approach to economic and fiscal management since 2002, solidified the first of the key platforms for sustained economic growth.
He quoted an IMF 2011 Article IV Report as saying…“Dominica withstood the global crisis well. The decline in global activity led to a mild contraction relative to most countries (-¾ percent) due to limited reliance on tourism, a mild pre-crisis boom in investment and supportive fiscal policies.”
Notwithstanding the continuing uncertainty in the external economic environment, Prime Minister Skerrit said “Government is retaining its economic growth target at an average three percent per annum. Increased levels of activity are expected in all sectors, and in particular in tourism, agriculture, manufacturing and energy.”
The Prime Minister in speaking about his Government’s strategy for growth indicated that the Public Sector Investment Programe (PSIP) will remain the most prominent policy tool to stimulate economic growth. The PSIP for the financial year 2012/13 is estimated at $134.7 million.
“Acting as a fiscal stimulus, this programme of targeted capital expenditures continues to fuel economic growth, particularly in the construction sector,” Prime Minister Skerrit added.
The Prime Minister emphasized that while the country continues to find solutions to respond to the current global economic challenges he reminded citizens that “there are no easy answers or any quick fix solutions.”
“It is all about focusing on the priorities we must pursue, it is about commitment to hard work, it is about endurance, it is about steadfastness and loyalty to country. When we consider all these, we reiterate that Government’s response to the economic challenges must be the pursuit of economic growth while maintaining a strong fiscal stance,” the Prime Minister highlighted.
According to Prime Minister Skerrit, the budget reflected his government’s prudent macroeconomic management which would continue to be guided by debt sustainability.
“Government has successfully concluded debt restructuring negotiation with the last major commercial creditor. The successful restructuring of the $82.6 million bond with the Royal Bank of Trinidad and Tobago (RBTT) is a major achievement of the Government. Presently, less than one percent of the debt remains un-restructured. The result of the debt restructuring allows for a longer maturity on the debt instrument and the application of a lower interest rate,” Prime Minister Skerrit said.
The Prime Minister expressed with confidence “that the policies, programmes and projects of this government have had a positive impact.”
The Prime Minister said further that his government would continue to place emphasis on major growth areas including Agriculture and Tourism in the next fiscal year to ensure improvements in quality of life of Dominicans.
“Government recognizes that agriculture has the potential and provides the opportunity for rapid growth. On the export side, there is an increasing demand for a number of crops in which Dominica has a competitive advantage within the Caribbean.”
“Madame Speaker, the history of reviews of the tourism sector, and the scope for development of the sector is well documented starting with the report of British firm, Shankland, Cox and Associates, some forty two years ago. Suffice it to say, Madame Speaker, each report recognizes that there are challenges in making Dominica a major tourist destination but more importantly each report acknowledges the tremendous opportunity that Dominica has for becoming a major destination,” he added.
The 2012-2013 Budget was presented under the theme: “Fulfilling the Social Contract/Remaining focused in the midst of Economic Turbulence.”