Minister of Finance and Economic Development, David Carew has proposed in his budget speech, that locally manufactured and imported beverages with alcoholic content of less than 10% will attract excise tax of 30% while for those with 10% and above alcoholic content, the excise tax is 40%.
The Minister said he was proposing the introduction of a specific excise duty on alcohol and alcoholic beverages; pending the full introduction of alcohol specific excise taxes.
He stated that, apart from excise duty on bulk imported petroleum products, taxes on other goods such as tobacco products and alcoholic beverages are levied on an “ad valorem” basis (i.e. on the value of the goods).
The Minister further explained that the practice throughout the world is that excise taxes were levied on specific basis (i.e. per unit of the item consumed).
In that case, he went on, the rationale is that tax was imposed in indirect relation to the harmful or anti-social element of the product being taxed “as typically, excise duty will be imposed on the quantity of alcohol in a beverage rather than on the value. It is also transparent and easier to administer” the Minister said.
David Carew also proposed that the import duty on the imported cement which was reduced from 20% to 10% in the 2006 budget as a short –term –measure has now being proposed to be in its original rate of 20%; while the raw material used for the production of cement will continue to attract a duty rate of 5%.
Recognizing the important role motor cycles are playing particularly, for the less well – off, the Finance Minister proposed that the import duty on motor cycles be reduced from 20% to 10%.
He also disclosed that certain raw materials for some manufacturing industries were in the form of finished intermediate or finished products which could be sold directly to consumers.
As such, he went on, companies over the years whose raw materials fall under that category have been paying duty rates applicable to intermediate or finished products, which was higher than the duty rate of 5% applicable to raw materials and capital goods.
“To ensure fairness and encourage domestic production, where goods are imported as raw materials and if could be proved that they are being used solely for that purpose, they would attract the duty rate of 5% applicable to raw material imports”.