Income tax threshold up to $85,000

Jan 17, 2023 News

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– school grant increased by $10,000, public assistance by $3000; $5B for undetermined cost of living measures

Kaieteur News – As part of measures highlighted in budget 2023, Senior Finance Minister Ashni Singh has announced a $10,000 increase in the income tax threshold, $3,000 increase in public assistance and another $10,000 hike for parents with children attending schools between the nursery and secondary levels.

During the $781.9B budget presentation on Monday read by Dr. Singh, it was announced that the income tax threshold would be increased to $85,000 monthly commencing this year. Last year, the threshold was increased from $65,000 to $75,000 monthly. “As a result of this adjustment, over 12,000 persons will be removed from paying income taxes, and every single taxpayer will benefit. This will result in a $3.3B increase in disposable income. At an individual taxpayer level, this translates to an additional disposal income of $33,600 annually for every taxpayer who is currently earning $100,000 per month,” Singh told the National Assembly.

The senior minister said that the Because We Care School Grant has been increased to $35,000 per child. He noted that in Budget 2021, the grant was increased from $15,000 to $25,000 in Budget 2022 and the grant was further extended to accommodate students attending private schools.  “This will benefit over 214,000 school children in public and private schools, and will place an additional $2.1 billion in the hands of their parents,” the finance minister informed. He continued “that the newly increased grant of $35,000 together with the uniform grant of $5,000 per child will see parents receiving $40,000 per child in total.” The two grants, he said, will transfer some $8.6B to parents of school aged children.

Public assistance recipients will see an increase of $2,000 coming from the State. Dr. Singh noted that budget 2022 provided a $14,000 monthly public assistance allowance, up from $9,000 in 2020. For the year 2023, persons receiving public assistance will now get $16,000. Additionally, in 2022, Dr. Singh said the government announced the registration of disabled persons for the automatic allowance of monthly public assistance. They too will be receiving the $16,000 public assistance sum. As it relates to old age pensioners, they will access a monthly sum of $33,000 and increase of $3,000 from 28,000 last year. This measure, Dr. Singh said will benefit approximately 73,000 pensioners, each of whom will now receive an additional $60,000 per annum, placing an additional $4.4 billion of disposable income in their hands.

Recognising the continued impacts of cost-of-living challenges due to global developments, Dr. Singh revealed that another $5B sum would be allocated for cost-of-living measures that will development and implementation from ongoing community engagements. The same sum allocated last year.

Last year, the government launched the part-time job programme as part of measures to cushion the rising cost-of-living. Dr. Singh said the part-time job programme allowed for one person per household to work in public offices in close proximity to their homes for 10 days per month and earn $40,000. “Over 11,000 persons were employed through the programme in Regions 2, 3, 5, 6, 9 and 10, injecting $2.3B into these households since the programme started in the second half of the year. In 2023, this programme will continue and will be expanded with $10B allocated. The beneficiaries of this programme are encouraged to up skill themselves so they can eventually take up full-time employment as the labour market is confronted with a shortage of skills in certain areas,” Dr. Singh reported.

He went on to highlight that in support of the housing development sector, government remains committed to providing 50,000 house lots by the end of their term. He said that home ownership will now enjoy an increase in the low-income mortgage ceiling to $20 million, up from $15 million, thus reducing the cost of borrowing within this range from the commercial banks, and further incentivizing home ownership. The government also informed about the removal of 14 percent VAT on the sale of residential properties.

The Government adjusted freight charges to the pre-pandemic levels (March 31, 2020) to combat the escalation in shipping costs which were passed on to consumers by importers. Dr. Singh highlighted that while this relief was initially implemented for a six-month period in 2021, it was further extended to cover the whole of 2022. The adjusted freight charges will also remain for the whole of 2023, costing over $6B.  Budget 2022 saw the reduction of excise tax on petroleum products from 20 percent to 10 percent. In March of that year, the Government cut this tax further from 10 percent to zero, resulting in tax revenue losses of over $17B. Dr. Singh said the government remains committed to absorbing the impact of volatile fuel prices, and will continue to monitor the developments in global oil prices going forward. The zero excise taxes on fuel will be maintained as long as fuel prices remain elevated, the minister said.

Budget 2023 announced the removal of the currently applicable 14 percent VAT on new (vehicles less than four years old) electric motor vehicles (not hybrid) of any power rating. In support of business’s moving to more environmentally friendly vehicles, Dr. Singh announced an increase in the writing down allowance applicable to all electric motor vehicles to 50 percent annually. In relation to the importation of new (vehicles less than four years) motor vehicles below 1500 cc, Dr. Singh said the duty will be reduced from 45 percent to 35 percent, reducing the cost of importing such a vehicle by approximately $200,000. “In relation to used vehicles below 1500 cc (used for the purposes of this paragraph refers to vehicles 4 years and older), we will replace the current tax rate with a flat rate of taxes of $800,000. This will reduce the cost of importing such a vehicle by $300,000 on average.” Dr. Singh said that an aggregation of the measures implemented “will place over $50B in the hands of citizens, easing cost of living pressures while incentivising the expansion of economic activity and job creation.”

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• Because We Care School Grant, Income tax, school grant, Senior Finance Minister Ashni Singh, threshold

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