New Government increases go in effect on April 1st that will see Customs Duty on fuel, Payroll Tax go up with tobacco and alcohol.
Finance Minister Bob Richards also announced a new 5 percent sales tax on services in his Budget Speech on Friday.
The new General Services Tax (GST), designed to “broaden the tax base… will be levied on turnover from the provision of most services by service providers to the public”.
“It is proposed that this GST will be levied at a rate of 5 percent,” said Mr Richards.
“As this is a change that will require significant adjustments in operations, billing, and reporting on the part of service providers and collecting, tracking and enforcement on behalf of Government, this tax will not be implemented until April 1st 2017 at the earliest.
“Notable exemptions to the General Services Tax will be in the sectors of banking, insurance and health care. Small service providers will also be exempted from the tax.
“The net uptake from this new tax is anticipated eventually to be approximately $50 million per year.”
Other tax hikes include Customs Duty on fuel, Payroll Tax,tobacco and alcohol.
“The standard rate of payroll tax will be set at 15.5% in 2016/17, an increase of 1 percent,” said Mr Richards.
“There will also be a similar increase of 1.0 percent for most other tax rate categories. The limit on taxable wages for purposes of payroll taxes will remain the same at $750,000.
“The rate of tax recoverable from employees will be set at 6.0% in 2016/2017, up from 5.5%. This is so that the increase may be shared by both employer and employee.
“Payroll concessions currently in place for the hospitality, restaurant and retail sectors will be partially rolled back in 2016/17 with businesses in these sectors paying a rate of 8.0 percent.
“The yield from Payroll Tax following the revised rate structure and partial rollback for payroll tax concessions is estimated at $390 million in 2016/17.
“The duty on fuel will be raised by 8 cents per litre in April 2016 and 5.5 cents for fuel imported by BELCO to achieve additional Customs revenue of about $11.7 million.
“The duty on cigarettes and tobacco and beer, wines and spirits will be raised in April 2016 to achieve additional customs revenue of about $4.0 million.
“Government fees for an array of services provided to the public will be increased by about 4% for most fees and the anticipated increased yield should be $12 million.”
The Minister continued: “Nobody likes tax increases, not the Ministry of Finance, not the rest of the Government, not the business community, not the man in the street. Some of the measures outlined in this Budget Statement will not be popular.
“But Debt Service has become the second largest “ministry” in Government. It is stealing from the future of our children and their children. It is constricting our ability to respond to people’s needs. It is weakening our ability to maintain the infrastructure that supports everyday life.
“It is threatening our solvency and, with that, our financial independence. So we must get to grips with the deficit and debt problem because they stand between us and a secure future.