IMF Calls For GST Hike In Belize
by Mike Godfrey, Lowtax.net, Washington
05 October, 2016
The International Monetary Fund in its annual review for Belize has recommended that the territory hike its general sales tax rate.
The IMF welcomed the "important steps" taken by the authorities to contain public expenditures and increase revenue, but highlighted that additional measures, particularly raising the GST rate, reducing the public wage bill, reforming the pension plan for civil servants, and strengthening public financial management, will be important going forward.
Directors noted that the loss of remaining Correspondent Banking Relationships (CBRs) could have a negative impact on the financial sector and the wider economy and will require action on multiple fronts, both domestically and internationally. They also highlighted that stronger implementation of the AML/CFT framework and improved transparency in the offshore sector, with technical assistance where needed, would help further improve compliance with international standards and understanding of money laundering and terrorist financing risks, and help address the withdrawal of CBRs.
The IMF said the economic outlook has worsened further since last year's review. GDP is projected to decline by 1.5 percent in 2016, in part due to the damage inflicted by hurricane Earl, and average less than two percent in the medium-term.
The fiscal position has weakened, pushing the public debt higher. The overall fiscal deficit expanded to eight percent of gross domestic product (GDP) in 2015.
As a fiscal measure, the authorities have increased their fuel tax, which is expected to increase revenues by close to 1.5 percent of GDP.
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