ST. GEORGE’S, Grenada, The Grenada government Monday presented an EC$1.66 billion (One EC dollar=US$0.37 cents) “fully financed” national budget to Parliament, announcing also the introduction of a new tax system that goes into effect from January January 1.
“The Grenada tax, as it will be called, will allow for online filing and payment of the Value Added Tax (VAT), the Corporate Income Tax, and the Pay As You Earn (PAYE) tax,” Finance Minister Dennis Cornwall told legislators.
He said that the second phase, which will see the rollout of the other tax types, such as the property tax, stamp duty, and business licenses, will take place in the last quarter of 2024.
“We are excited about the new tax system as it aims to improve the tax experience by leveraging technology and innovation,” Cornwall said, adding that in the context of the implementation of the new tax system, the Inland Revenue Department (IRD) will ramp up its enforcement of tax arrears, guided by the provisions of the Tax Administration Act.
He said this would include implementing the requirement for a tax clearance certificate for accessing loans, transferring property, receipt of government contracts and other such services, as well as liens and garnishments and offsetting taxes against payments for government services.
Cornwall said a risk-based approach will be taken, starting with the most significant outstanding amounts.
The Finance Minister said that the government implemented a tax amnesty program to support the twin objectives of implementing a new modern tax information system with updated tax records and providing relief to taxpayers in the post-COVID-19 era.
“The amnesty has been broadly successful, resulting in additional revenue collections of EC$23.2 million at the end of November 2023. Some 6,319 taxpayers benefitted from the amnesty,” Cornwall said, adding that he was taking “this opportunity to strongly encourage all delinquent taxpayers to come forward and settle your arrears before the amnesty expires at the end of December of this year.”
The government said that its second budget since winning the June 2022 general election sets the country and its citizens on a path towards resilience, empowerment, and growth.
According to the Finance Minister, Recurrent Revenue is pegged at EC$1.2 billion with total grants of EC$104.6 million.
The Recurrent Expenditure is estimated at EC$901.4 million, with Capital Expenditure at EC$419.5 million. The Current Account Surplus is EC$315.4 million, and principal repayments are at EC$335.5 million.
The government said that the primary surplus after grants is estimated at EC$57.2 million, while the overall surplus after grants is EC$0.6 million.
Cornwall said that the budget is consistent with the Fiscal Resilience Act of 2023, reflecting the government’s commitment to fiscal prudence and the sustainability of public finances.
As a practical example, he said that the average wage bill for the next three years is expected to be at most 10 percent of gross domestic product (GDP) compared to the ceiling of 13 percent in the Fiscal Resilience Act.
During his budget presentation, Cornell announced that the vehicle dealership license fee would be amended to be EC$10,000 annually or EC$1,000 per vehicle. The vehicle license fee would be increased by EC$50 across all vehicle types to support improved road maintenance.
He said that an independent Committee would be appointed to develop a framework of compensation, including salaries and fringe benefits for Cabinet ministers and senior managers, telling legislators “the current framework, wherein salaries of Cabinet ministers and Permanent Secretaries are tied to the outcome of union negotiations is not good practice.”
The Finance Minister said that for citizens 18 years and over, new passports will now be issued for ten years, and those under that age will be issued for five years.
“This policy seeks to increase the security of our passports while at the same time making it less cumbersome and frequent for passport renewals,” he said, also adding that the no-printing of more than five pages policy” across the Public Service will be further reinforced.
Cornwall said this policy was introduced last budget to support digitization and waste reduction efforts, adding, “We intend to make further progress on advancing this policy.”
The Finance Minister said that in 2024, the government will introduce cost-of-living and other relief measures, including maintaining and adding 20 essential food items and other necessities for a year to the VAT-exempt status./
The policy, which goes into effect on January 1, will be reviewed in December 2024.
Cornwall said that the government would place all the VAT-listed products that are currently not on the price control list on the list for active monitoring by the authorities “to ensure that consumers do not suffer from wholesalers or retailers engaging in price gouging on these items.
“The wholesale and retail markups will be determined after consultations with industry stakeholders.”
The Finance Minister said that the Dickon Mitchell government will maintain the fixed price of EC$40 on the 20-lb gas cylinder and that the total estimated revenue forgone for the two measures is EC$5.5 million.
“We will maintain the reduced rate of petrol tax at EC$3.50 per gallon instead of EC$5.50 on duty-paid sales at an estimated revenue foregone of EC$18.8 million,” Cornwall said, adding “we will maintain the electricity subsidy of EC$10 per month for all residential consumers consuming up to 99 kWh per month at an estimated cost of EC$2.4 million.”
The finance minister said the budget will benefit the most vulnerable workers in the country, ranging from a minimum wage increase from January 2024 to
He said the private sector would also benefit from the spin-off effects of the projects and programs, such as the extension of temporary incentives to micro, small, and medium-sized enterprises and non-priority sector projects.
“Our young people in the IMANI program, who are working in the public sector, will benefit from an increase in their minimum monthly pay to EC$1200 per month and an improvement in their security of tenure, with their placement on Government contracts pending full regularisation to the Public Service.
“Our students and parents will benefit from our free tuition and free meal programs, which will cost the government close to six million EC dollars in 2024. Our less fortunate households will benefit from improved water and sanitation through the WASH Programme.
“Mr. Speaker, our elderly over 65 years, who are on the SEED Programme, will benefit from an additional EC$200 per month to cover their medical and other expenses,” Cornwall said, adding that citizens with disabilities, including mental illness, who are on the SEED program, will also benefit from an additional EC$200.
“Mr. Speaker, our policies, projects, and programs in this budget will create significant employment opportunities for the benefit of those currently unemployed. Our citizens, especially our less fortunate, will benefit from our cost-of-living relief measures on food and fuel.
“Mr. Speaker, our public servants will benefit from the four percent increase in their salaries and our staff regularisation policy. Our workers on contracts will benefit from regularization and a contributory pension plan,” Cornwall told Parliament.
Debate on the budget is due to start on Thursday.
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