By Horace Palacio: Few promises sound sweeter to a working ear than this one. Get rid of income tax. Let Belizeans keep their whole paycheck.
The Prime Minister himself has said it plainly, that the goal is to eventually eliminate PAYE altogether. And crowds cheer, because who would not want the taxman’s hand out of their pay envelope?
Today I want to ruin that party with arithmetic. Because for the majority of Belizeans, abolishing income tax would put exactly zero extra dollars in their pocket, and once the bill for it arrives, quite possibly less than zero. Let me prove it.
Start with a question. How much income tax did you personally pay last year?
If you are like most working Belizeans, the honest answer is nothing. Because here is the fact the cheering crowds have never been walked through. Since January of last year, anyone earning $29,000 or less per year, roughly $2,400 a month, pays no income tax in Belize. Not a reduced rate. None.
Now hold that beside the incomes this column has documented all year. The minimum wage worker earns about $11,700 a year. The median Belizean worker earns around $12,000. The BPO agent, the shop clerk, the security guard, the young teacher starting out, nearly all of them sit far below $29,000. The woman selling tamales, the farmer, the taxi man, the whole informal economy, they were never in the PAYE net to begin with.
Which means the majority of Belizean workers already live in a country with no income tax. It arrived quietly, threshold by threshold, and credit where due, those threshold raises were good, targeted policy that this column applauds.
So do the simple math on abolition. You cannot relieve a person of a tax they do not pay. Zero, multiplied by the grandest reform in the world, is zero. For most of Belize, get rid of income tax is a promise of nothing, wrapped in applause.
Then who actually gains? Only the minority earning above the threshold, and the higher the salary, the bigger the gift. The senior manager gains. The top professional gains handsomely. And here is the delicious irony nobody mentions at the rallies. Every Cabinet minister, every CEO in government, every parliamentarian earns far above $29,000. Abolishing income tax is, among other things, a raise for the very people proposing it, funded by everyone.
Funded how? That is the second half, and it is where nothing becomes less than nothing.
Government does not get cheaper because a tax disappears. The clinics still need medicine, the teachers still need salaries, the debt we so painfully climbed down from still demands its payments. Kill a revenue stream and the hole must be filled, and there are only four shovels. Raise GST, which every soul in Belize pays, the millionaire and the market vendor alike, 12.5 cents on the same tin of milk. Raise import duties, which walk straight into every shelf price, as every back-to-school mother at the western border can testify. Borrow, and hand the bill plus interest to our children, marching us back up the debt mountain we just descended. Or cut services, which bleeds the very families who rely on the public clinic and the public school most.
Notice what all four shovels share. Every single one digs from the pockets of ordinary Belizeans, the same Belizeans who gained zero from the abolition. That is the full transaction, honestly stated. The top earners are relieved of a progressive tax, and the replacement is collected at the checkout counter, where the poor pay the same rate as the rich. There is an old name for moving money in that direction, and it is not tax relief.
If you want to see this movie’s ending, look across the water. The Bahamas has no personal income tax and never has. Is it a worker’s paradise? It carries some of the highest living costs in our region, because its government is funded through duties and value added tax collected at the register, invisible in the paycheck, unavoidable in the grocery bill. No income tax never means low taxes. It means hidden taxes, moved from the pay slip, where the broad-shouldered pay more, to the checkout, where everyone pays alike. The oil states of the Gulf can skip income tax because petroleum pays their bills. Belize, last I checked, has no such well.
So here is the verdict, plain enough for any rally. For the majority of Belizeans, abolishing income tax delivers zero dollars of relief, and then the replacement taxes and prices arrive to collect. The promise that sounds like money in your pocket is, for most, a hand slipping quietly into it.
What should government do instead? The answer runs through everything this column has argued for a year, so let me gather it.
Keep raising the threshold instead of abolishing the tax. Lifting the exemption toward the nurses, teachers, and sergeants in the squeezed thirty-to-forty-thousand range costs a fraction of abolition and reaches people who actually pay. The machinery already exists. This is the honest version of the same instinct.
Cut the taxes the poor actually pay. Zero-rate the essentials basket, the staple foods, the school supplies, the medicines. Trim the duties on the goods of survival. This is the reform that reaches the tamale vendor, the farmer, and the minimum wage mother, the millions of dollars of relief that lands where income tax abolition never could.
Attack the cost of living at its roots. The port costs, the customs delays, the energy bills, the thin competition among importers that lets prices rest fat. A ten percent drop in the grocery basket is worth more to the median family than the abolition of a tax they never paid.
Collect what is already owed. Before shifting burdens, close the leaks, the connected firms and comfortable earners who escape the net, and the procurement waste this column has chronicled all year. Every wasted dollar is a tax with no service attached.
And grow the paycheck itself, through the skills, the production, and the ownership this column preaches weekly, because the finest tax policy on earth cannot rescue an economy that does not produce.
Judge every tax promise, Belize, by one simple test. Does it reach the woman selling tamales? Income tax abolition never touches her life. The price of rice touches it every single day.
The question is never whether a tax dies.
The question is who gets handed its bill.
The views expressed in this article are those of the author, Horace Palacio, and do not necessarily reflect the views or editorial stance of Breaking Belize News.
The post Abolishing income tax sounds like money in your pocket, for most Belizeans it is zero dollars appeared first on Belize News and Opinion on www.breakingbelizenews.com.
By Horace Palacio: Few promises sound sweeter to a working ear than this one. Get rid of income tax. Let Belizeans keep their whole paycheck. The Prime Minister himself has said it plainly, that the goal is to eventually eliminate PAYE altogether. And crowds cheer, because who would not want the taxman’s hand out of
The post Abolishing income tax sounds like money in your pocket, for most Belizeans it is zero dollars appeared first on Belize News and Opinion on www.breakingbelizenews.com.
