Prime Minister Roosevelt Skerrit announced the repeal of an income tax and presented Parliament with a new budget on Tuesday.
The stabilization levy, part of an economic program that also reduced government worker's salaries by 5 percent, taxed annual incomes of Eastern Caribbean $9,000 (US$3,500) or more than 3 1/2 percent.Skerrit said the removal of the levy will "put more money in the hands of the workers," thus generating economic activity. Many had blamed the levy for contributing to the island's economic hardships and demanded it be repealed.
The Public Service Union, representing government workers, has challenged the cut in government workers salaries in court and a ruling is expected next month.
Skerrit also presented Parliament with an EC$267.2 million (US$99 million) budget for 2004-2005 on Tuesday, an increase of EC$10.5 million (US$3.9 million) compared to last year, saying government finances had shown "remarkable improvement."
Most of the additional funds are slated for capital projects, such as infrastructure improvements and construction of a sports stadium that the China has promised to help build.
Skerrit said he hopes to use the economic improvements to build a 2 percent budgetary surplus for 2004-2005 and 3 percent surplus in the two succeeding fiscal years.
Debate on the budget is expected to open up Thursday but opposition leader Edison James does not mention the small island's EC$900 million (US$336.5 million) debt.
This is the last budget before general elections next year.
Last week, Skerrit signed an agreement with a Trinidad law firm to issue new short term, intermediate and long term bonds, hoping creditors will exchange existing 7 to 9 percent debt instruments for new bonds with 3 1/2 percent interest rates.
