Musa said that the government will soon reconvene the Tax Committee to advise on several matters:

"First, the Tax Reform Committee will be asked to review proposals to increase the threshold of income tax to $24,000 and reintroduce tax exemptions for charitable contributions to registered organizations, schools and athletic organizations.

"Secondly, Government will ask the Committee to review the Excise Tax regime to remove the perverse incentives to engage in contraband activities. Although there has been some success in enforcement and interdiction, contraband activities continue to exist in flagrant contravention of the laws and at great cost to revenue.

"Thirdly, Government will ask the Tax Reform Committee to review the GST with a view to making recommendations for improvements which may be necessary."

In July 2006, Belize abolished its sales tax, replacing it with a 10% goods and services tax, or GST.

Musa stated that the Tax Reform Committee will be asked to make its recommendations on these 3 matters by June 30, 2007.

The draft budget assumes that real GDP will grow by between 1.5% and 2% in 2007 and that nominal GDP will grow by about 6%. According to Musa, on this basis, there should be natural growth in tax revenue of 6% with incremental increases accruing because of improvements in revenue administration.

Musa said that emphasis will continue to be placed on expenditure control in order to achieve the targets for the primary and overall balances.

"The underlying objective is to ensure that the primary surplus remains above 3% of GDP and the overall deficit declines towards 1% of GDP. And without any increases in taxes," he stated.

Recurrent revenue is comprised of $593.9 million in tax revenue and $57 million in non-tax revenue. The strong growth in tax revenue reflects a $34.0 million increase in collections of taxes on income and profits of which $20 million is a contribution from the Petroleum Fund which is soon to be established to receive all the revenues from the petroleum industry – the remaining $14 million increase reflects natural growth in line with economic expansion.

Property Taxes will see a marginal increase of $0.3 million next year, International Trade and Transactions Taxes will increase by $15.9 million, and Taxes on goods and services will increase by $15 million, Musa explained.