ROSEAU, Dominica, (CMC) — Prime Minister Roosevelt Skerrit says Dominica is on the path towards prosperity based on the performance of the economy.

Skerrit on Thursday presented a budget of EC$918,255,358 (US$340 million) against the backdrop of the island being on a path of growth in 2016, despite setbacks in 2015 due to the passage of Tropical Storm Erika.

In his presentation themed “Realising a modern and prosperous Dominica”, Skerrit said the economy recorded growth of 2.8 per cent.

“The Eastern Caribbean Central Bank (ECCB) says the Dominican economy is expected to grow by 3.1 per cent in 2017 and 2018 — this buoyant outlook contracts sharply with the rest of the Caribbean and Latin America….the growth experienced by Dominica is clearly better than the rest of the Caribbean.”

“This is Dominica’s moment and we as a country must seize it; we could cash in the growth dividend of successful economic management with a broad expansion of existing spending programmes. That would be far easier…but this Government is not in the business of sitting back and basking in its success. What we propose is a bold journey that begins this morning,” said Skerrit.

According to the prime minister, non-tax revenues of $421.0 million are anticipated — a significant part will come from the Citizenship By Investment Programme which is expected to contribute $399.9 million for the year. The lion’s share of the budget will go toward the Ministry of Finance, that of $241.9 million.

“Included in this amount is a provision for meeting the cost of promotional activities and payment of due diligence fees relating to the Citizenship By Investment Programme (CBIP) in the sum of $101.7 million.”

In the area of taxes, Skerrit said in order to achieve the Government’s vision, there must be a tax system “that incentivises employment over consumption and income over idle assets”.

“Consequently, Madam Speaker, we shall be directing the National Fiscal Policy Panel to consider and advise on the abolition of the 15 per cent and 25 per cent income tax bands as early as the next fiscal year.

Under this proposed system, Dominicans would only start paying income tax when their income reaches the 35 per cent tax rate.

“This is a major, bold, move. By this measure, we will remove from the payment of income tax all Dominicans earning less than what can be termed a decent middle-income salary, and all of those earning more will only pay tax on their income above this level. In this move we are saying to all that Dominica is a place that does not penalise work and income.”

The prime minister announced that until the new structure is in place, he would ease the burden and enhance the cash flow of workers in Dominica by increasing the minimum income tax threshold from $25,000 per year to $30,000 per year.

“This means, Madam Speaker, that effective January 1, 2018, no person earning $30,000 a year or less will pay income tax and those working for more than $30,000 a year will have the first $30,000 exempted from income tax deductions.”

He added that in the medium term, in order to replace the loss of income a new feature will be added “to our successful Citizenship By Investment Programme”.

“We are examining a plan to encourage some of our new citizens, who do not reside in Dominica, to consider becoming tax residents here. The advantage for them would be a tax identification number, which is increasingly becoming a requirement for carrying out international business.”

He said for new citizens who wish to become tax residents here without living on the island for the normal requisite time, they may be given the option of becoming tax residents “as long as they pay a minimum amount of income tax”.

“This would serve a number of purposes. Most importantly, it would ensure that our engagement with our new citizens is deeper and more continuous. But it also has the potential to provide a substantial amount of additional revenue annually.”

Skerrit said that it’s likely that this new proposal could yield more than the $34.0 million raised last year by all of the existing income taxes in the country.

“We are excited that this proposal would graduate the CBIP to a new level; from a programme based around an initial investment to one where there was a constant flow of annual taxes from new citizens. As soon as we are satisfied that we have the right design and have fully assessed the costs and benefits and the risks and opportunities, we will bring it to Parliament,” he said.