Prime Minister Dean Barrow, in wrapping up the debate on the national budget on Friday, March 26, thanked Belizeans for “understanding” — this amid the move to implement a 25% increase in the General Sales Tax, from 10% to 12.5% — a measure that will cause consumers to spend an estimated $40 million more in the consumer taxes starting April 1, 2010.
The budget, which Barrow presented on Monday, March 15, looks to $811.5 million in receipts from revenues and grants, but the spending bill is $876.3 million. This clearly leaves a budget deficit. Barrow proposed a suite of tax measures, including a hike in the GST rate from 10% to 12.5%, to raise $61.5 million in taxes. Meanwhile, he introduced $10 million in “relief measures,” which he said would help the poor.
After two days of debate on Thursday, March 25, and Friday, March 26, the tax increases were also approved. Unlike the tax hike in 2005, under the Musa administration, which saw a series of protests and rioting, there was no vocal opposition outside the National Assembly.
“Nobody was out their rioting. Nobody was out there demonstrating. Nobody was out there calling for our heads,” said Barrow. “Nobody is out there challenging this government, because we have signed no secret deals, diverting public money to cronies for kickbacks. We have inked no illegal loan notes or settlement deeds, arranging hundreds of millions of dollars in tax evasion for billionaire friends; we have not corruptly spent the people’s money. …” (Barrow was throwing mud at the former administration of ex-PUP leader, Said Musa, area representative for Fort George.)
This year’s budget looks to garnering $55 million more in sales tax than the revised estimates. Taxes from the consumption of goods and services, along with taxes on income and profits, account for the vast majority of government’s tax receipts. Of the $61.5 million in new taxes which are rolled into the new budget, the GST increase will account for nearly 70%. The Barrow administration blames the debt legacy left by the Opposition People’s United Party (PUP); though the Leader of the Opposition John Briceño chalked it up to the incompetence of the Barrow administration to lead the country through a global financial crisis.
“I am extremely gratified by the sympathy of the Belizean people, and I am confident that that sympathy has been buoyed by the fact that this government is seen and known to be trying to govern honestly,” Barrow said as he continued to wrap up Friday’s debate.
Praising his administration, Barrow said the budget is “honest and good.”
“This has been a very difficult exercise and we have had to make some hard choices; and I had said this at the time of the introduction of the budget and on the two radio shows that I have been on since the Monday of the budget presentation; again I have not sought to gloss over the facts,” said Barrow.
“What has, therefore, amazed me is the level of understanding that the people of this country — at least judging by the calls I’ve received — the level of understanding and maturity that the people of this country have shown,” he added.
He thanked the Opposition for “the very minor extent” to which “one or two of them [in the Opposition] made constructive comments and criticisms on the budget.”
The Prime Minister also noted, “Nobody likes to pay more taxes, Mister Speaker, however justified the increase may be. But generally, there seems to have been an acknowledgment of two things: (1) Just how much we have been squeezed between the super-bondage legacy of the PUP and what Alan Greenspan, the former Federal Reserve chairman of the US has called the worst recession in living memory. That’s the first thing. …The second thing that I believe that the people of this country freely concede is that this government has striven mightily to protect and even empower the poor in next to impossible circumstances.”
As the debate ensued on Friday, various UDP members spoke, endorsing Barrow’s budget: Carlos Perdomo, UDP representative for Caribbean Shores, whose Ministry of National Security suffered the biggest budget cut in the recurrent allocation for operations and regular expenses, being cut by $6.5 million, said: “I am proud to support this budget.”
All six Opposition People’s United Party members had their say on Thursday, and collectively boycotted Friday’s debate; their seats were empty, as only ruling United Democratic Party members of the House of Representatives were slated to speak.
“They don’t return today to conduct the people’s business,” Barrow chided, noting that the revenue appropriation bill (which is for the passage of the new budget) must still be considered in the committee of the whole House. Changes must be made, and the legislation must go through. “They are not here to do that.”
The first man to speak in the debate on Friday was Deputy Prime Minister Gaspar Vega, Minister of Natural Resources and the Environment and UDP area representative of Orange Walk North, also echoed sentiments of other party members that it was the super-bond arranged by the former PUP administration that had put the Barrow administration in the position of having to raise taxes. Vega’s ministry also suffered a cut in the recurrent budget.
Vega said that during the closing financial year, the Government is paying $47 million for interest alone. “And if that is not bad,” he added, “this year, we again will be paying over 66 million dollars just toward the interest alone. …”
Vega said he would love to have used those funds “to acquire private lands from those big rich land owners to be able to subdivide and give to poor, humble Belizeans. …”
Rene Montero, Minister of Agriculture, UPD representative for Cayo West, noted that the budget includes $44.2 million for investments in the productive sector.
Government revenues may fall short by roughly $90 million in this outgoing financial year (2009-2010), and some Belizeans have been clamoring for a larger take from petroleum earnings. According to Barrow, the projected total inflow was $45 million from the local petroleum sector for the closing financial year. He described it as “a boon,” although even the Government concedes the funds are not nearly as much as they want.
It is on the record that the national budget reads NIL for the windfall tax that was implemented under the Barrow administration in 2008, despite the bonanza the industry enjoyed in those months spanning 2008 and 2009.
Along with this budget, Barrow is pursing a $1 per barrel excise tax on locally produced fuel. He said the measure would yield $1.8 million per annum. The General Sales Tax increase of 10% to 12.5% should raise over $40 million, assuming the Government’s projections hold true.
Prime Minister Dean Barrow made a concession on Friday afternoon, saying that he would make the necessary adjustments to ensure that the income tax exemption applies to persons earning $500 a week, or $26,000.
When he initially announced the expansion of income tax exemptions, Barrow had said that the benefit would apply to those earning $500 a week and $24,000 a year. However, the Leader of the Opposition John Briceño had questioned the calculation in day one of the debate, saying that $500 a week amounts to $26,000 and not $24,000.
The Trade Union Congress of Belize’s president, Dylan Reneau, had also raised concerns over how the income tax exemption would apply. The NTUCB has openly asked Barrow to delay the budget, because it disagrees with the formula for filling the budget deficit.
The 2010-2011 budget was approved in the form of a revenue appropriation bill, after going to committee Friday afternoon. The House also approved bills to implement the accompanying tax measures, namely amendments to the Customs and Excise Duties (Amendment) Bill, the General Sales Tax (Amendment) Bill (to increase the rate from 10% to 12.5%), the Export Processing Zone (Amendment) Bill, to implement social fees.
The House also approved two other bills: the Supreme Court of Judicature (Amendment) Bill (to strengthen provisions related to contempt of court) and the Lotteries Control (Amendment) Bill.
The upper house of the National Assembly — the Senate — is set to receive the budget for discussion on Tuesday, March 30.
(Author’s Note: The session began with a prayer of Bahá’u’lláh, a Persian religious leader – this read in place of the Belize National Prayer.)