San Pedro BTIA members appeal to GOB for tax relief to pay employees
Sunday, April 12th, 2020
Business owners across Belize are feeling the COVID-19 pandemic financial pinch, which has paralyzed economies around the world. With the tourism industry all but gone on Ambergris Caye, many islanders who are now without jobs are getting assistance with donated meals and groceries. At the same time, other employers have kept their staff on payroll, despite the absence of business. This expense is taking a toll, and in order to continue doing so, stakeholders on the island are appealing to the Government of Belize (GOB) for tax relief. In a letter from members of the San Pedro Branch of the Belize Tourism Industry Association (SP BTIA) addressed to Prime Minister Right Honourable Dean Barrow, the member-based organization proposed that businesses be allowed to apply General Sales Tax (GST) and business taxes to pay their staff instead of giving the collected funds to the GOB, which are scheduled to be paid to the government on April 15, 2020.
Businesses on the island (and countrywide) are the backbone of the local economy and sometimes forgotten in difficult times when they too can become vulnerable. These include our local bars and grills, small eateries, delis, restaurants, small hotels, and other businesses that support the island’s economy and labour force. Some of these establishments do not own their places of operation and need to pay rent, but more importantly, have employees who are essential to their business. With no income, financial difficulties are even more substantial. Despite the challenges, many employers are opting to keep staff on the payroll, even if it means reducing their wages. As GST and business tax payments near, businesses are reaching out to the government for tax relief, so they can use those funds to continue paying their staff.
In the letter dated April 9th, the petition to obtain economic mitigation from taxes is expected to not only help businesses meet their payroll but essentially save the government monies that could be used as unemployment benefits. The SP BTIA points out that by keeping people on a salary, the individuals don’t need government assistance while contributing to the local economy.
The letter provides examples of monies collected during March 2020 for GST payment. One business owner has collected $5,500 BZ of GST. This business, which is closed for the foreseeable future, has 14 employees. The employees received their paid vacation time, and their earnings were reduced by half. By not laying them off, these employees do not depend on the government’s assistance of $75 BZ per week because they continue to be employed. With their flow of income, these people continue to purchase items at the local stores, pay utility bills and rent, which results in local economic stimulation.
As explained in the letter, the government’s plan calls to pay all laid-off employees a total of $900 BZ over the next 12 weeks. If these 14 employees mentioned above were to be laid-off, the government’s total financial assistance would amount to $12,600 BZ for the 12 weeks. The SP BTIA’s petition on behalf of its members is emphasizing to the Prime Minister that with the GST payment, and in the case of this business, all 14 employees can be paid at half-salary for those 12 weeks. Now, the amount for each employee per week is $196 BZ. The stakeholders supporting this petition strongly agree that the only way they can further pay their staff is via tax relief.
GOB will save if it provides tax relief
Instead of paying $12,600 BZ for the 14 employees mentioned in the letter, should they be laid-off, the Government of Belize can save up to $7,100 BZ if the tax relief allows the employer to use the $5,500 BZ to pay these 14 employees for the upcoming 12 weeks. Prime Minister Barrow was reminded that this is a real example from a practical business currently paying employees while being closed. This represents many other businesses in the country ranging from food, beverage, tour operators to accommodations. The appeal to the government included a spreadsheet reflecting a cross-section of 28 local companies currently employing over 165 persons. The letter suggests that if employers are permitted to withhold business taxes, their workforce will remain employed for an average of 4.4 additional weeks countrywide and stressed that employment could be extended into the second week in May if tax payments are held back and given to employees as pay.
With this information and the support of the community business owners and stakeholders, the SP BTIA asks the government to make a reasonable accommodation to allow business owners, who continue to support their employees, by either negating payment of taxes or deferring them without financial repercussions.
The letter ended by reminding the Prime Minister that with the added income received by employees and stakeholders, they can continue supporting the local economy. Tax relief is strongly believed to save the government thousands of dollars, which can then be used to help those that need it the most via the unemployment relief program.
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