US$301m tax free budget
The Grenada government today presented an EC$783.4 million (US$301.3) tax free budget to Parliament and announced its intention to remove the income tax paid on severance pay to workers who have lost their jobs as a result of the impact of the ongoing global economic crisis on the island.
Finance Minister Nazim Burke said that the amendment to the Income Tax Act would cater for workers who lost their jobs dating back to 2008.
“Government will immediately take steps to secure an amendment to the Income Tax Act to waive personal income taxes otherwise payable on income earned by an employer where that income is received by way of severance to such an employee whose relationship with the employer is brought to an end on account of the current economic crisis,” Burke told legislators.
“The amendment being sought should have retroactive effect from September 2008 to assist those who lost their jobs earlier in the crisis”.
Burke also announced that the Tillman Thomas government would extend a stimulus package targeting the construction sector and the automotive industry.
A 50 per cent reduction of Value Added Tax (VAT) on construction inputs such as cement, lumber, steel and roofing was introduced last year for six months. But during his budget presentation, Burke said that the reduction will remain in effect for the rest of the year and will be extended by a further 7.5 per cent.
The Finance Minister said that the removal of the Excise Tax on the importation of vehicles which had been iin force since October would remain in effect until September.
“During the period, the impact of the measure which has already been positive for both the industry and the Government will be further assessed.
“The current arrangement provides an opportunity to remove the overall tax rates on new vehicles while at the same time reducing tax concessions granted on many vehicles,” Burke said.
He told legislators that a 10 per cent rebate to manufacturers on their VAT sales would remain in effect for the rest of the year.
Burke said that the 2011-12 fiscal package is intended to spur economic recovery and create jobs.
The Finance Minister said the government would embark upon a youth employment programme targeting 1, 500 unemployed school leavers who will also receive a stipend and placed in the private and public sector under an internship programme as part of the measures to deal with the 30 per cent unemployment situation on the island.
He said a poverty assessment report in July 2008 had found that young people between 16 and 25 accounted for 42 per cent of those unemployed.