ST.VINCENT (Jan. 24):- Vincentians will this year begin paying 15 per cent more for vehicle licences even as their government selves a new property tax regime pending changes to existing laws.
The Unity Labour Party (ULP) administration, which was returned to office for a third term last month, will this year also increase professional licences, registry fees, survey office fees, and some stamp duties.
Prime Minister and Minister of Finance Dr. Ralph Gonsalves announced the new revenue measures while presenting the EC$786.5 million budget for 2011 on Monday, Jan. 24.
He said the budget, which also includes several proposals for stimulations of the productive sectors, was “crafted in an external economic environment shaped by the global financial and economic meltdown of September 2008, and continuing”.
Gonsalves said his government has spent more than EC$100 million to upgrade the Windward Highway and plans to upgrade roads on the leeward (western) side of the island, including provisions in this year’s budget for the road network in South Leeward.
He also spoke of improvements to the secondary road network, some of which, he said, have been damaged by heavy rainfall particularly in the aftermath of Hurricane Tomas.
“The government is not only faced with the capital and recurrent cost of road repair but also with the related debt servicing cost as well,” Gonsalves said, adding that the increases in vehicle licences will earn the government some EC$1.3 million.
Professions licence fees were last increased in 2002, even as his government has lowered the top marginal rate of corporate and personal income tax from 40 per cent to 32.5 per cent, Gonsalves said.
He said professionals have benefited from this measure and there is a steady growth in the number of professionals operating in the country.
Gonsalves said his government will increase professions licence fee by 20 per cent with a view to adding a further EC$$120,000 to the national purse annually.
After eight years at the current levels, the fees for the registration of documents and surveys will be increased by an average of 25 per cent.
Gonsalves said these increases will be in keeping with “normal inflationary trend” and the stamp duty on several instruments will be increased at an average of 20 per cent for the first time since 2002.
He said the increases are intended to adjust for the change in inflation and are expected to yield EC$250,000 in revenue in 2011.
The government will further remove the exemption of stamp duty in respect of any conveyance or transfer operating as a voluntary disposition, without consideration in money or money worth, between parents and children, brothers and sisters and spouses.
“This exemption has been in operation for the last 20 years. The exemption is now being used by unscrupulous persons and lawyers to evade the tax, as evident by the large number of deeds of gifts relative to total deed of transfer which are registered each year,” Gonsalves said.
He said that he has five years ago warned that abuse of this concession beyond its intended scope would require an appropriate response.
“It is unbelievable the extent of the abuse,” Gonsalves said, adding, “…the exemption is inequitable, in that, persons who have to purchase property are required to pay the stamp duty, whereas others in similar circumstances who are gifted property are exempted from this tax”.
Regarding property taxes, Gonsalves said that over the past two year, his government has re-evaluated every property in the country and intends to introduce a market value base assessment to replace the current annual rental value assessment.
The number of properties identified in the revaluation exercise amounts to 40,700, compared with 25,940 on the existing valuation lists, an increase of 57 per cent.
Gonsalves however said that the new tax regime requires significant legislative changes and government will postpone its implementation.
The government will continue with the annual rental value assessment “for the time being” but has updated the assessment for all properties to reflect the increases in rental values since the last valuation in the 1990s, he said.
Gonsalves said the updated valuation lists for each district will soon be published and property owners can appeal if they are not satisfied with the value ascribed in the list.
He further said that the existing level of compliance of the Property Tax is relatively low and his government “will be taking steps in 2011 to improve this level and to collect outstanding taxes”.
Gonsalves said the additional revenue to be realised from the increase rental value, the increase in the number of properties, improved compliance and collection of arrears is estimated at EC$3.4 million for 2011.
Read the Budget address: SVG 2011 Budget Address