Massive revenue hole

AFTER Opposition Leader Mark Golding warned in the House of Representatives last Tuesday that the delayed implementation of the Environmental Protection Levy is depriving the Government of revenue it was counting on in this year’s fiscal plans, Opposition Senator Ramon Small-Ferguson last Friday estimated that about $1.6 billion of the projected $3.6 billion has been placed at risk. Small-Ferguson said the figure is a straight-line estimate based on the five-month delay in implementing the levy, while acknowledging that the actual amount would depend on the volume of imports and domestic sales during the period. The Barita Investments chief executive officer made the calculation as he questioned the Government’s handling of the revenue measure, which was announced in February and initially scheduled to take effect on May 1.

He told the Senate that the delay is particularly concerning because the Government’s revenue performance was already under pressure. “The Government has had more than seven months to prepare the legislation and Parliament is only being given days to consider it. It doesn’t seem like good governance to me,” Small-Ferguson said.

The revised levy was projected to generate about $3.6 billion between May 2026 and March 2027. The Government had initially proposed increasing the rate from 0.5 per cent to 0.8 per cent and raising the taxable base for locally manufactured goods from 75 per cent to 100 per cent of sales. Following concerns from manufacturers about the effect on local producers, the Government retained the 75 per cent base and increased the rate to 0.85 per cent instead.

The measure was still expected to generate approximately $3.6 billion. Small-Ferguson said the delay, therefore, had direct implications for the revenue target. “On a straight line basis, the five-month delay places approximately $1.6 billion of that projection at risk.

Now the final amount will, of course, be dependent on more complex factors than what a straight-line basis would take into account, the amount of imports and domestic sales that have happened over the period,” he said. He argued that the issue should not be viewed simply as a delay in passing legislation, but against the Government’s broader fiscal position. “It’s a substantial sum that has been placed at risk that would not have been collected because of this delay, in the context of government re…