BROOKLYN, NY – Prime Minister Roosevelt Skerrit presented EC$993.6 million (One EC dollar=US 0.37 cents), saying that the fiscal package is intended to help in the building of a “dynamic Dominica” going into the future.
Skerrit, who is also Finance Minister, told legislators that his administration would be implementing several new initiatives covering several areas, including technology, increased foreign investment, agriculture, tourism, and construction.
The Finance Minister announced a series of tax relief measures, including the tax on the residential rental income.
“So from henceforth, Mr. Speaker, there will be no taxes on residential rent in Dominica. The 20 percent, the 15 percent will be no more because we are aware that many of these rental properties are owned by salary workers and pensioners who are already paying their fair share of income tax,” Skerrit said, adding that his administration would further like to encourage “these types of investments.”
Skerrit also announced a relaxation of some of the financial measures regarding students’ loans, allowing them or their parents “to claim all of the interest paid on their student loans” from January next year.
He said that the government would also allow for an income tax deduction for premiums paid to insure homes and properties, with the maximum deduction being EC$8,000 taking effect from next year.
“Government is now offering individuals a health insurance income tax deduction. This deduction will be regarding individual or family health insurance premiums paid and will take effect from the fiscal year 2022”.
During his two and a half-hour presentation, Skerrit said that the Public Sector Investment Programme (PSIP), for which EC$438.9 million has been allocated, will be funded through the Citizenship by Investment Programme (CBI) to the tune of EC$253.3 million, loans, estimated at EC$64.8 million and grants valued at EC$120.8 million.
Skerrit said that all the major components of tax revenue are expected to improve, with taxes on domestic goods and services showing the largest overall improvement.
He said non-tax revenue reflected mainly by CBI revenues is expected to play a significant role in stabilizing the central government’s finances.
The overall recurrent revenue for 2021-22 is estimated at EC$853.1 million, an increase of 29.4 percent over the projected actual revenue for the fiscal year.
He said the major contributors are value-added tax (VAT) EC$143.5 million, international trade tax EC$76.3 million, and other domestic taxes EC$66.1 million. At the same time, non-tax revenue is estimated at EC$492.3 million, with personal income tax pegged at EC$30. 9 million, corporate income tax EC$33.7 million.
“Mr. Speaker, this is a very positive outlook and sets the context for the presentation of the budgetary proposals for the fiscal year 2021-22,” Skerrit said, adding that the recurrent expenditure for the fiscal year is estimated at EC$650 million with the largest allocation going to the Ministry of Finance, estimated at EC$266.1 million.
Skerrit told the Parliament that the local economy is projected to grow by 3.4 percent this year, driven largely by increased activity in construction and the agricultural sectors, “with a ripple effect evident in other sectors like the wholesale and retail trade, mining, and quarrying.
“Developments in the manufacturing sector are also expected to contribute to the increased real output,” Skerrit said, adding that the projected growth in 2021 will be led by the planned acceleration in implementing the PSIP largely financed by CBI.
He said during this fiscal year, approximately 58 percent of the capital budget, equivalent to EC$253.3 million, will be funded by the resources of the CBI.
“The construction of the international airport financed by the CBI is a flagship project in this year’s budget. This highly anticipated project, the largest government’s investment in our history, will yield significant economic gains for the duration of its construction and during its operation,” the Finance Minister said.
He said improved air access and the numerous jobs created “will inevitably result in economic prosperity for the country and people alike.
“Additionally, several ongoing CBI funded projects…are expected to continue in this financial year,” Skerrit said, naming several projects within the tourism sector.
Skerrit said that the International Monetary Fund (IMF) May 2021 report, Dominica’s economy is expected to grow by 8.1 percent in the calendar year 2022, with growth averaging 8.5 percent per annum over the medium term.
“It is clear that the CBI program continues to have a positive life-changing impact on our people and the economy and indeed justifies its own existence, and that’s why Mr. Speaker, it is in the interest of all of us to protect it and defend it, not to seek to destroy it,” Skerrit said, referring to the program under which foreign investors make a significant contribution to the socio-economic development of the island in return for receiving citizenship of the island.
In his budget presentation, Skerrit said that the island ha, despite the coronavirus (COVID-19) impact on the economy, had been making debt repayments promptly and welcomed a multi-million dollar reprieve from the Paris Club.
He said the Central Government’s debt service payment for the period under review was EC$47.1 million and that the government also provided support to the Agricultural Investment and Development (AID) Bank and the Dominica Water and Sewerage Company Limited (DOWASCO) to make their debt service obligations.
He said in this fiscal year, the debt service repayment by the government is estimated at $93.9 million, including interest of EC$35.6 million. He said guaranteed debt repayment for that same period is projected at EC$17.3 million.
“There were no breaches of the target set in the medium-term debt management strategy even in these most difficult circumstances. This government has continued with the prudent management of the country’s finances.
‘We are also committed to achieving the debt to GDP (gross domestic product) ratio of 60 percent and maintaining sustainable debt levels well in advance of the 2035 target agreed to by the Monetary Council of the Eastern Caribbean Currency Union’ (ECCU),” Skerrit said.
Skerrit said that his administration had been putting initiatives to deal with during and after a crisis, referring to extreme weather situations, pandemics, and global economic downturns.
“We must always be prepared to position ourselves individually and collectively to be able to respond effectively to such shocks and minimize disruptions to normal activities. As the saying goes, we must save for a rainy day and refrain from overcoming our finances to meet the extraordinary expenditures which will arise when adverse events occur,” Skerrit said.