a. Increasing Disposable Income
i. Salary Adjustments
6.2 Mr. Speaker, Government continues to work to resolve anomalies and disparities across comparable positions within the Public Service. As previously announced, the first phase of salary adjustments will take effect in this month, benefiting over 5,000 healthcare workers and almost 9,000 members of the Disciplined Services, resulting in an additional $3 billion in disposable income in the hands of these workers, provision for which is made in Budget 2023.
ii. Income Tax Threshold
6.3 Mr. Speaker, it would be recalled in Budget 2022 that the income tax threshold was increased from $65,000 to $75,000 monthly. I now propose to further increase the threshold to $85,000 monthly, with effect from year of income 2023. 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 $3.3 billion increase in disposable income. At an individual taxpayer level, for illustrative purposes, this translates to additional disposal income of $33,600 annually for every single taxpayer who is currently earning $100,000 per month.
iii. Because We Care Student Grant
6.4 Mr. Speaker, our PPP/C Manifesto 2020 committed to restore and increase the $10,000 Because We Care School Grant which was callously and vindictively taken away by the AFC/APNU Government in its tenure. We fulfilled that promise in Budget 2021 and further increased the amount from $15,000 to $25,000 in Budget 2022. In addition to students in public schools, in 2021, this cash grant was extended to students attending private schools. I now wish to announce that Budget 2023 caters for a further increase to the Because We Care cash grant from $25,000 to $35,000. 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.
6.5 Mr. Speaker, it is worthwhile to point out that the newly increased grant of $35,000 together with the uniform grant of $5,000 per child will see parents receive $40,000 per child in total, and the two grants together will amount to a transfer totalling $8.6 billion being made to parents of school age children.
b. Easing the Cost of Living
i. Containing the Cost of Fuel
6.6 In Budget 2022, one of the key measures to mitigate price increases was the reduction of excise tax on petroleum products from 20 percent to 10 percent. In March of that year, our Government cut this tax further from 10 percent to zero – a measure that has resulted in tax revenue losses of over $17 billion. 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.
ii. Reduction in Freight Charges
6.7 Mr. Speaker in August 2021, 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. This relief measure was initially implemented for a six-month period from August 1, 2021 to January 31, 2022 and in Budget 2022, it was further extended to December 31, 2022. I now wish to announce an extension of this measure for a further 12-month period from January 1, 2023 to December 31, 2023, at a cost of over $6 billion. Relevant Govern-ment agencies will continue to be vigilant in ensuring that these benefits are passed on to consumers.
iii. Expansion of Part-time Job Programme
6.8 In 2022, Government launched the part time job programme among the suite of measures implemented to cushion the rising cost of living. The job programme has 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 $2.3 billion 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 $10 billion allocated. The beneficiaries of this programme are encouraged to upskill themselves so they can eventually take up full time employment as the labour market is confronted with a shortage of skills in certain areas.
iv. Other Cost of Living Measures
6.9 Mr. Speaker, recognising continued impacts of the cost of living challenges due to global developments as previously highlighted, Government continues to consult with stakeholders across the country on the development and implementation of interventions to alleviate the impact of increases in prices. In this regard, a total of $5 billion is allocated for additional cost of living measures to be determined from the ongoing community engagements.
c. Supporting the Vulnerable
i. Increase in Old Age Pension
6.10 Our Government, since returning to office, increased monthly OAP from $20,500 in 2020 to $28,000 last year. As the Government continues to improve the country’s social safety net, with effect from January 1, 2023, OAP will be increased to $33,000. As a result of this increase, the cumulative increase granted since we returned to office in 2020 now exceeds 60 percent.
6.11 This measure will benefit approximately 73,000 pensioners, each of whom will now receive an additional $60,000 per annum, thereby placing an additional $4.4 billion of disposable income in their hands. With this latest increase, the total OAP bill now amounts to $28.9 billion.
ii. Public Assistance
6.12 Budget 2022 included an increase to $14,000 monthly to public assistance beneficiaries up from $9,000 in 2020. In addition, in 2022, Government announced that all persons with a disability will be registered automatically to receive monthly public assistance. I now wish to announce an increase in Public Assistance from $14,000 monthly to $16,000 with effect from January 1, 2023, an over 75 percent increase since the PPP/C Government resumed office – to the benefit over 29,000 persons. This will provide over $700 million in additional disposable income to these individuals.
d. Other Measures
i. Increase in Low-Income Mortgage Ceiling
6.13 Since resuming office in 2020, the Government has implemented a suite of measures in support of housing development and remains committed to providing 50,000 house lots by the end of our current term. Given the importance of home ownership, I now wish to announce an increase in the low-income mortgage ceiling to $20 million, up from $15 million, reducing the cost of borrowing within this range from the commercial banks, and further incentivising home ownership.
ii. Removal of VAT on Residential Properties
6.14 In support of Government’s aggressive housing drive and to reduce the cost of home ownership, I propose the removal of the 14 percent VAT with respect to the sale of residential properties, which will also further reduce the cost of home ownership.
iii. All Electric Motor Vehicles
6.15 Mr. Speaker, in keeping with our commitment towards development along a low carbon development pathway, and to incentivise the transition to lower emission vehicles, I wish to announce the following:
The removal of the currently applicable 14 percent VAT on new electric motor vehicles (not hybrid) of any power rating (new for the purposes of this paragraph refers to vehicles less than four years old).
In support of business’s investment decision to switch to more environmentally friendly vehicles, I wish to announce an increase in the writing down allowance applicable to all electric motor vehicles to 50 percent annually.
iv. All Electric Motor Vehicles
6.16 In today’s modern age, the ownership of a motor vehicle is no longer considered a luxury, with vehicle ownership improving the ease of access to and from the places of home, work, and learning. In this regard, I now wish to announce the following measures to reduce the cost of motor vehicle ownership:
In relation to the importation of new motor vehicles below 1500 cc, we will reduce the duty of 45 percent to 35 percent (new for the purposes of this paragraph refers to vehicles less than four years old). This will reduce 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.
6.17 Mr. Speaker, an aggregation of these measures will place over $50 billion in the hands of citizens, easing cost of living pressures while incentivising the expansion of economic activity and job creation.
