Grenadian Government Persists With 5% Levy

by Mike Godfrey, Tax-News.com, Washington

18 January 2006

Prime Minister Keith Mitchell and the Grenadian government are persisting with the plan to impose a 5% levy on payrolls in order to finance post-hurricane reconstruction, and last week invited the Chamber of Industry and Commerce and the Conference of Churches of Grenada to mediate with the trades unions, who had threatened mass protest action if the government goes ahead with plans to implement the tax.

Fighting over the proposed new National Reconstruction Levy (NRL) has been quite highly charged, with the government and the unions accusing each other of acting politically. The Trades Union Council is said to have taken strong objection to the government's claim in a paid-for advertisement that the trade union movement is nothing but a branch of the main opposition party, the National Democratic Congress.

The levy - call it a tax? - was to have been imposed from 1st January; it is now being suggested that the government will announce the levy in the budget to be delivered on January 20th, but defer its implementation until some sort of compromise has been reached among affected parties.

At first, the Government planned to apply the 5% deduction to the whole of workers' salaries but has since agreed to except the first EC$1,000 (US$370). The rates of the NRL are as follows:

• On the first $1,000 of salary, 0%;
• Between $1,000 and $5,000, 5%;
• Over $5,000 to $9,000, $225 flat rate;
• Over $9,000, $350 flat rate.

The government says that if the NRL is not implemented, the island stands to lose $15 million in aid from the IMF.

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