NASSAU, Bahamas (BIS Press)– The government expects to collect 7.8% more in revenue this fiscal year than it did the previous year, due to its measures taken to strengthen its revenue collection processes, Prime Minister and Minister of Finance the Rt. Hon. Hubert Ingraham said Wednesday during his presentation of the government’s 2008/2009 budget communication.
And making good on a pledge made by his government to simplify the Customs Tariff and combine customs duty and stamp tax on imports, Mr. Ingraham announced that the government will reform the Customs Tariff as of July 1.
The purpose of this exercise, he noted, is to follow international practice and also to remove the outlined taxes from any reduction exercise which might be necessary as a result of admission into the World Trade Organisation.
“The Ministry of Finance and the Customs Department have completed the study of administrative and other arrangements needed to accomplish the amalgamation of Customs Duties and Stamp Tax on imports in the 2008/09 Budget. Hence, with effect from 1 July, 2008, we are reforming our Customs tariff,” Mr. Ingraham announced.
The Prime Minister explained that in the first instance the government will combine the Customs Tariff Rates with the corresponding Stamp Duty Rates.
The government is also extracting from the Customs Tariff those items which are treated as ‘excises’ in international practice and placing them in a new Excise Act. These include the luxury items such as perfumes and tobacco and cigarettes, and also high value items such as vehicles and petroleum.
This essentially means that the sum of the present rates of Customs Duty and Stamp Duty will become the new excise rates under the new Excise Act.
“Total recurrent revenue in 2008/09 is projected at $1,574 million, fully 7.8% higher than the provisional outturn for 2007/08,” Mr. Ingraham advised. “This fairly robust revenue performance, in the face of an economy whose rate of growth moderated in 2007 and early 2008, attests, I believe to the success of the efforts that have been deployed to strengthen revenue collections.
“The reform measures that I outlined should further bolster the buoyancy of our revenue system.”
The Prime Minister pointed out that the measures to reform and modernize revenues will result in important changes in the government’s major sources of revenues.
The new Excise Tax, for instance, will now account for $234 million of total revenues in 2008/09. Customs duties, from which a number of products were removed and placed in the new Excise Act, will now account for $516 million in revenues, as compared to $591 million in 2007/08.
“Stamp taxes on imports having been amalgamated with customs duties and built into the new excise duties will no longer represent a source of revenue,” he noted.
A further step in reforming the way the Government does business and collects revenue, Mr. Ingraham added, will be exploring to the maximum extent possible, means of consolidating and streamlining its revenue collection operations.
This, he said, will be one important element in the government’s overall strategy to make it easier for taxpayers to deal with Government and to comply with their tax and fee obligations.
Back in 1995, the previous FNM administration started the process of rationalizing and simplifying the Customs Tariff when it reduced the number of tariff rates from 129 to 29, concurrently reducing many rates of duty with the result that the average tariff rate in the country fell from 45% to about 35%.
In addition to announcing the reform of the Custom’s Tariff, the Prime Minister also foreshadowed a review of the government’s process of financial administration.
“Since 1973, management practices have made major advances, and the volume of Government revenues and expenditures have increased enormously,” Mr. Ingraham said.
“A review of the Financial Audit and Administration Act is now appropriate to determine the full extent of the legal provisions which should govern the accountability and transparency of Government expenditure and revenues.”
It is envisaged that a revised Financial Administration and Audit Act will be part of the 2009/10 Budget.