IMF Urges Barbados To Broaden Tax Base
by Mike Godfrey, Lowtax.net, Washington
22 July, 2015
The International Monetary Fund has welcomed the increase seen in Barbados's tax revenue, but has urged the authorities to broaden the tax base further.
The Fund said in a statement following its 2015 Article IV consultation with Barbados that revenue gains, mostly from income taxes, helped to bring the Central Government deficit down from 11.2 percent of gross domestic product (GDP) in 2013/14 to 6.6 percent of GDP in 2014/15. Barbados has increased its revenue through improvements to tax administration and the introduction of a new municipal waste tax.
However, the statement said that the country's fiscal deficit and debt levels are still high. It urged the authorities to implement a comprehensive reform program that includes strong fiscal adjustment and structural reforms to foster growth and debt sustainability. Among other things, it encouraged the Government to remove tax waivers.
The IMF welcomed efforts to improve the monitoring and fiscal discipline of public enterprises and urged the authorities to strengthen their accountability and accelerate restructuring.
Earlier in January, the Value-Added Tax (Amendment) Bill 2015 was passed by Barbados's Parliament. The law included provisions to amend the VAT Act to ensure that tax is levied on imported goods regardless of whether a reduced rate or no import duty is payable under the Customs Act or any other Act. The Government also said it intends to substantially reduce the number of goods subject to a VAT reduced rate or an exemption, with 409 imported goods currently not subject to the 17.5 percent headline rate.
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