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May 26, 1998

Government proposes new taxes on businesses

In Friday’s newscast we reported on a new initiative by the Prime Minister to abolish corporate income tax and exempt from personal income tax all individuals earning less than twenty thousand dollars per year. But lost in the general euphoria was the flip side of that proposal: that is a new business tax which will hit the entire range of private enterprises and likely provide the government with far more revenue than it will lose from its easing of the income tax. According to details of the proposed legislation, which became available over the holiday weekend, the new tax looks very much like the old G.R.T. It lays out a schedule of percentages, ranging from three quarters of one percent of gross revenue in the case of newspapers and radio, to twenty five percent in the case of B.T.L. In between are rates of one point five percent for the majority of businesses, three percent for a wide range of professions, four percent for insurance companies and fifteen percent for banks. Most members of the business community contacted by News Five had not yet even seen the legislation and thus could not comment on it. The bare outlines of the measure were first announced in the government’s budget speech in March. At that time private sector representatives pointed out that the concept particularly penalized firms in high volume, low profit businesses as well as start up operations which, while losing money in early years, could at least look ahead to carrying forward those losses to set off against future profits. Under the proposed legislation the carrying forward provision would be eliminated and all businesses — including companies, partnerships and sole proprietorships — would be taxed on gross volume whether or not they earned a profit. The bill will be debated in committee before the next meeting of the House and is expected to be met with stiff resistance. When contacted today opposition leader Said Musa said his party is now studying the proposals and will soon be making its position known.

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