Richard?Lord

While an es­ti­mat­ed 1,300 busi­ness­es will no longer have to pay Val­ue Added Tax (VAT) from next month, thou­sands of cit­i­zens will have to dig deep­er in their pock­ets to buy sev­er­al items, such as rice (ex­cept par­boiled and boiled), flour (ex­cept all pur­pose and wheat), cof­fee, or­ange and grape­fruit juices, mau­by, tea and toma­to ketchup.

This, as these items are among those that will no longer be VAT ze­ro-rat­ed when the new 12.5 per cent rate of VAT is ef­fect­ed on Feb­ru­ary 1.

This is ac­cord­ing to Fi­nance Min­is­ter Colm Im­bert who pre­sent­ed the Fi­nance Bill 2016 for de­bate in the House of Rep­re­sen­ta­tives yes­ter­day. While the mea­sure al­so seeks to re­duce the 15 per cent VAT to 12.5 per cent, Im­bert said that would not re­sult in low­er gas prices.

"Even though we are re­duc­ing the rate of VAT from 15 per cent to 12.5 per cent, this will not re­sult in the price of pe­tro­le­um prod­ucts.

"In­stead we will ad­just the du­ty on pe­tro­le­um prod­ucts so that the prices at the pump will re­main the same as an­nounced in the na­tion­al bud­get," he said.

Im­bert said the coun­try ex­pect­ed to suf­fer a short­fall in oil rev­enue of $2.4 bil­lion this year if oil prices re­mained de­pressed at about US$40 a bar­rel. Im­bert said the price of West Texas In­ter­me­di­ate yes­ter­day was US$31.05 a bar­rel.

"This dra­mat­ic en­er­gy price shock, com­bined with a steady re­duc­tion in do­mes­tic pro­duc­tion, is hav­ing a de­bil­i­tat­ing im­pact on our fis­cal and ex­ter­nal ac­counts and there will be spill over ef­fects on lev­el of eco­nom­ic ac­tiv­i­ty and em­ploy­ment," Im­bert said.

The min­is­ter said tax col­lec­tions from the en­er­gy sec­tor av­er­aged $26 bil­lion or 16 per cent of GDP over the pe­ri­od 2010 to 2014 but fell to $19 bil­lion in 2015 or 11 per cent of GDP.

He said cur­rent pro­jec­tions were that it would fall fur­ther to $12 bil­lion or sev­en per cent of GDP.

He said those fig­ures were for the en­tire en­er­gy sec­tor, in­clud­ing nat­ur­al gas.

Im­bert said the bill sought to re­form the Val­ue Added Tax regime, in­crease in per­son­al al­lowance for low­er in­come wage earn­ers, in­crease in the Busi­ness Levy and the Green Fund, in­crease per­son­al al­lowance from $60,000 to $72,000 and re­move the need for cit­i­zens 60 years or over to pay for pass­ports and dri­vers' per­mits.

Im­bert said there was no pro­vi­sion in the bill for the rein­tro­duc­tion of the Prop­er­ty Tax

"This de­bate is not about Prop­er­ty Tax," he in­sist­ed.

Im­bert told leg­is­la­tors: "We are al­so propos­ing an in­crease in the thresh­old for VAT reg­is­tra­tion from $360,000 to $500,000. This in­crease will re­duce the pop­u­la­tion of VAT tax­pay­ers by 1,300 eas­ing the com­pli­ance bur­den on the small­est en­ter­prise and im­prov­ing VAT ad­min­is­tra­tion."

But Im­bert said: "This in­crease in the thresh­old to $500,000 should not af­fect rev­enue sig­nif­i­cant­ly, since based on da­ta the largest ten per cent of VAT tax­pay­ers ac­count for 95 per cent of to­tal sales."

Im­bert said the Busi­ness Levy was be­ing in­creased from 0.2 to 0.6 per cent on gross sales to spread the bur­den of ad­just­ment in the coun­try.

He said that levy was paid by peo­ple or a com­pa­ny.

"If you do not de­clare a prof­it and you do not pay in­come tax ad­dress­es busi­ness­es that sim­ply do not de­clare prof­its. They have sales which could be sub­stan­tial but they de­clare loss­es con­tin­u­ous­ly.

"You have busi­ness­es with very large turnover, which mys­te­ri­ous­ly do not de­clare prof­its year af­ter year af­ter year," he added.

Im­bert said the Green Fund was al­so be­ing in­creased to al­low the Gov­ern­ment to ac­cess it as cur­rent­ly the Gov­ern­ment could not ac­cess the fund, which, he said, pre­vi­ous­ly was "mort­gaged" by the for­mer PP gov­ern­ment.

Deal­ing with the Prop­er­ty Tax, Im­bert said it would be rein­tro­duced at the rate that was paid in 2009.

He said the Gov­ern­ment would bring amend­ments to the Prop­er­ty Tax leg­is­la­tion to re­solve the cur­rent mis­un­der­stand­ings about its in­ten­tion.

Im­bert said the val­u­a­tion process would con­tin­ue in 2016 and "we will ad­just the per­cent­ages, the for­mu­la and the method of cal­cu­la­tion used in the Prop­er­ty Tax to en­sure there is fair­ness, eq­ui­ty and af­ford­abil­i­ty and en­sure that those who are least able to af­ford an im­po­si­tion of a tax are re­lieved from this re­spon­si­bil­i­ty."

Im­bert said leg­is­la­tion would be brought to the Par­lia­ment in March. He said a sec­ond Fi­nance Bill 2016 would be brought to the Par­lia­ment next month with in­cen­tives to stim­u­late the con­struc­tion in­dus­try, par­tic­u­lar­ly to fa­cil­i­tate the par­tic­i­pa­tion of the pri­vate sec­tor in the hous­ing con­struc­tion sec­tor

He said the mid-year re­view was ex­pect­ed in April, adding that the Gam­bling and Bet­ting Bill, leg­is­la­tion to sep­a­rate the Her­itage and Sta­bil­i­sa­tion Fund Act were ex­pect­ed to be brought to the Par­lia­ment by June.

He said the mid-year re­view should be brought in April.

Items re­moved from sched­uled TO ze­ro rat­ing

�2 Rice: Ex­cept par­boiled and boiled

�2 Flour: Ex­cept all pur­pose and wheat

�2 Bread: Ex­cept white and whole wheat

�2 Cheese: Ex­cept ched­dar and ren­net

�2 Peanut but­ter and salt­ed but­ter

�2 Pas­ta: (with meat or oth­er sub­stances) or oth­er­wise pre­pared, such as spaghet­ti, mac­a­roni, noo­dles, lasagne, gnoc­chi, ravi­o­li and can­nel­loni (ex­cept un­cooked or stuffed pas­ta)

�2 Co­coa pow­der

�2 Cof­fee

�2 Mau­by

�2 Or­ange and grape­fruit juice

�2 Ic­ing sug­ar

�2 Bis­cuits

�2 Vanil­la essence

�2 Toma­to ketchup

�2 Ground­nut oil

�2 Sun­flower seeds

�2 Yo­gurt

�2 Dairy spreads

�2 Tea

�2 Ce­re­al grains

�2 Pre­pared or pre­served meat, pre­pared or pre­served salmon, crab, shrimp

�2 Cake mix

�2 Waf­fles and wafers

�2 Pre­served veg­eta­bles and fruits

�2 Pre­served toma­toes

�2 Pre­served mush­rooms

�2 Pre­served veg­eta­bles, such as pre­served pota­toes, peas

�2 Jams, jel­lies, mar­malade

�2 Fruit nuts, oth­er ed­i­ble parts of plants

�2 Sauces and prepa­ra­tions

�2 Soups and broth

�2 Co­conut milk

�2 Ar­ti­fi­cial sweet­en­ers

�2 Malt bev­er­ages

�2 Her­ring

�2 Tu­nas

�2 Mack­er­el

�2 Soya bean oil

�2 Maize (corn) oil and its frac­tions

�2 Sesame oil and its frac­tions