ROAD TOWN, BVI -- A combined increase in revenue from tourism, increased market share in the financial services industry, and renewed activity in the other components of the economy, are the keys for achieving positive economic growth in the British Virgin Islands, according to premier and minister of finance, Dr Orlando Smith, during his 2013 Budget Address to the territory last week.
With projected operating revenue in the region of $298,729,000 and net operating expenditure of $252,397,600, Smith said the fiscal strategy for 2013 – 2015 takes into consideration, the global economic crisis which continues to have a profound impact on the territory.
Smith, in discussing the fiscal strategy, explained that the budget for the first time in the history of the British Virgin Islands is being done over a rolling three-year period, unlike the year to year budgets. This will assist the government in planning, not just in the short-term, but in the medium term.
“The citizens of this country would prefer more efficient use of the fiscal resources and economic growth in this territory rather than incurring an increased tax burden,” Smith said.
He added, “The new budget format, is now a more informative and transparent document, allowing for better management by the government as a whole, while at the same time allowing the people of this territory to hold us accountable in a manner that was not possible under the previous format.”
Smith explained that, in the new budget format, the revenue and expenditure patterns over a wider time period, states the objectives of each funded entity or programme within the government’s structure and provides performance indicators against which they can be measured. It is built upon a new chart of accounts that is based on the International Monetary Fund’s government finance statistics (GFS) format.
The government’s fiscal strategy constitutes fundamental principles, including increasing the recurrent budget surplus over the medium term through the enhancement of the revenue stream and a reduction in recurrent revenue growth; reducing the fiscal deficit by 2015; meeting the borrowing limit ratios stated in the protocols for effective financial management; and enhancing the financial management structure and practices within the government.
The government is moving forward with this direction because “we believe it is the only way that a prudent, transparent and responsible Government should operate,” Smith said.
Also included in the fiscal strategy are revenue generating measures:
1. changing the current work permit structure where fees will be based on occupation type with consideration given to average income by occupation type;
2. increasing trade license fees to cover the cost of administration while simultaneously revamping and enhancing the capability of the Trade and Consumer Affairs Department to provide better service to the public;
3. increasing court fees to be more in line with the cost of the services being solicited; introducing a general environmental levy to be collected at the ports of departure (air and sea) to fund environmental protection and preservation programmes;
4. collecting a fixed percentage of the revenue of the Telecommunications Regulatory Commission annually; undertake a comprehensive review of central government fee structure with the objective of raising additional revenue; and
5. adopting a more aggressive approach to the collection of current taxes and fees and arrears by reviewing current legislation to give revenue collecting agencies greater authority to enforce compliance.
According to Smith, the collective projected increase in revenues based on the initiatives hover in the region of $7,400,000 in 2013; $15,900,000 in 2014 and 2015 respectively.