CARICOM approves further derogations for Montserrat

Saturday, March 13, 2004

BRADES, Montserrat (GIU): CARICOM's Council for Trade and Economic Development (COTED) has approved further derogations for Montserrat for the next five years with an option to renew for a further five years, according to the island's Chief Minister.

Mr John Osborne, speaking in parliament during the presentation of the 2004 Budget Statement, said Montserrat has obligations to CARICOM under the Treaty of Chaguaramas in 1973.

The Government leader said he recognizes that the British Government is still considering the new Treaty before granting Montserrat an entrustment to sign.

CARICOM's earlier derogations for Montserrat expired in February 2004.

Chief Minister Osborne said with effect from June 1, 2004, Montserrat will introduce the International Harmonised Tariff System using as far as possible:

1. Rates that are similar to those required by members of Caricom and will be based on the 2002 Caricom Tariff structure.

2. Derogations from some rates for a period of five years in the first instance.

3. Request derogations on the following criteria - cost of living, health, tourism and infrastructure development concerns.

4. A reduced Service Tax rate from eight percent to five percent.

5. A three tier Consumption tax rate - 10 percent, 20 per cent and 30 percent as proposed in the last budget address except for alcoholic beverages and cigarettes. This will reduce the number of rates from over 30 to 3 rates.

6. Convert specific rates to ad valorem (in proportion to the estimated value of the goods concerned) to make the calculation of duties especially by computers much easier.

7. Ensure rates selected on implementation of the Common External Tariff yields a revenue neutral position. This means that revenue gains will be offset by revenue losses. 

"Government's aim is NOT to raise revenue but to comply with our obligations as a member of Caricom. In addition, the rates selected were chosen to ensure minimum impact on the rate of inflation," Chief Minister Osborne said.

He said when the tariff is implemented, it will not only be more aligned with that in Caricom but even more so, to the lower rates proposed by the World Trade Organisation.

Mr Osborne described the harmonised tariff as a major achievement.

Meanwhile, for the fiscal year 2004, government proposes a tax rebate of 25 percent on the total tax liability. In 2003, government gave a property tax rebate of 50 percent on the total tax liability.

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