Finance and Planning Minister, Dr. Omar Davies, has announced a 20 per cent increase in the Special Consumption Tax (SCT) on Cigarettes, and an Environmental Levy equivalent to 0.5 per cent of the Cost, Insurance and Freight (CIF) value of all imported goods, through which government expects to earn $1.7 billion this fiscal year.
The levy on Cigarettes, which takes effect today (April 13), is expected to yield $500 million for the fiscal year, while the Environmental Levy, from which the government expects to take in $1.2 billion, will be introduced on July 1.
The Finance Minister, in explaining how he intended to finance the 2007/08 budget in the House of Representatives yesterday (April 12), said that the implementation of these two measures would Reduce the fiscal deficit for the financial year to 4.5 per cent of Gross Domestic Product (GDP). This would translate to a one per cent Reduction, compaRed to the previous fiscal year.
Providing background to the move to place an Environmental Levy on imported items, Dr. Davies noted that "in 2003, I announced the intention of introducing an Environment Levy to assist in meeting the tremendous cost of cleaning the country and restoring many of our precious environment assets, which are deteriorating as a result of abuse and inadequate management of solid waste disposal."
He said that there had been some difficulty in arriving at a consensus on how this levy should be implemented, and advice had been sought on how other countries in the region and elsewhere have dealt with the matter.
"The payments made for this Levy", he informed, "will be allowed as a deductible expense under the Income Tax Act."
The government has announced a $380 billion budget for the fiscal year, with $214 billion to come from revenue and grant sources.