Belize should increase Consumption Taxes, IMF says

The International Monetary Fund (IMF) says that Belize should increase the General Sales Tax rate in order to cut its deficit.

According to the IMF, the jurisdiction should consider measures including broadening the base of the General Sales Tax (GST) and increasing its rate to the regional average of 15% (from 12.5%). It said that both steps could increase revenues by 1% of GDP (gross domestic product).

It was also indicated by the IMF that electronic tax filing and payment systems could also be enhanced, especially for GST and income tax, where less than 10% of registered taxpayers file or pay their taxes electronically.

In his March budget speech, Dean Barrow, Belize’s Prime Minister and Minister of Finance and Natural Resources, rejected the IMF’s “publicly rehearsed” advice to raise general sales tax (GST), ditch zero-rated treatment for certain products, cancel exemptions, and increase personal and business income taxes as “regressive and punitive to both citizens and enterprise.” He instead announced a series of “pro-poor and pro-people” reforms, which he said would increase revenues by 2.2% of GDP. These include a 10 percent income tax on statutory boards of “quasi government entities;” increasing the excise levy on aerated water, beer and stout, cement, and fuel; increasing the environmental charge on imported goods by 1%; and raising stamp duty on foreign exchange permits by 0.5%.

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