As early as the beginning of the New Year, large and small businesses alike, operating within the confines of rural communities and villages can expect one additional charge tacked on to their expense in the form of a trade licenses fee.
The announcement was made on Wednesday, October 13th, via a Cabinet brief which announced that the Minister of Rural Transformation, Community Development, Labor & Local Government, Hon. Oscar Requeña, had received Cabinet’s approval for the “implementation of trade licensing reforms in all municipalities and villages. The reforms will modernize and standardize the trade licensing regime. Additionally, villages will, for the first time, be able to charge trade licensing fees.”
When we spoke to Requeña on Thursday, he stressed that while the exact fees for rural communities have not been finalized as yet, the system applied would differ from that currently in use. One palpable difference, the minister explained, would be that the trade license fees applied in the villages would be dependent on the classification of businesses.
In addition to the introduction of business-classification criteria, Requeña explained that even the method for arriving at the “annual value of the premises” will be different.
“The criteria that will be used for the municipalities will be different from the rural communities. … We are looking at what is called the ‘productive space’ where the business actually operates,” he said. “Under the old system, normally a business owner would pay for all the other spaces including where he operates his business. … Now we will only be requiring them to pay just for their ‘productive area,’ just where they operate their business.”
As any business located in any of the nine municipalities to which the Trade Licensing Act currently applies (i.e. Belize City, Benque Viejo, San Ignacio/Santa Elena, Dangriga, Belmopan City, Corozal Town, Orange Walk Town, Punta Gorda, and San Pedro), the current system charges the fee based on the companies’ annual rental value. Consequently, by way of an example, if a business in downtown Belize City pays $10,000 in rent for the year, the Trade Licensing Act’s section 24 says that the trade license “fee” should be about $2,500.
More specifically, section 24 reads: “The annual licence fee payable in respect of the carrying on of any trade shall be an amount equal to one-fourth [25%] of the annual value of the premises in which the business is carried on.” This language has enabled the city and town councils to apply the existing trade licensing regime even to businesses that do not rent but rather occupy their own buildings. Especially in the case of owner-occupied properties, the local authorities would make an assessment based on the square footage of the place of business.
This system, according to Requeña, will be tweaked for the villages by ensuring that only the “productive space”—which reportedly excludes areas of the buildings that are not integral to the conduct of business—would be used to evaluate the annual value of the premises.
The minister also indicated that for the rural communities, the government will be creating a two-tiered system that allows for businesses with less than 500 square feet to be charged less, as compared to those businesses above 500 square feet. There is, however, need to confirm whether the businesses below the 500-square-feet threshold would be charged a flat fee or some other system.
Impact on Villages
When we asked the Minister what prompted the movement he told us that it was a part of the Briceño Administration Plan Belize Manifesto which seeks to widen the opportunities for rural communities to improve their revenue base. As is Requeña stressed that rural communities sometimes have little to no financial support from Central Government and so through this medium, the village councils will be able to generate greater revenue on their own. Also sitting in on those consultations was president of the National Village Council Association(NAVCO) Javier Sabido. “Well it is something that we welcome and something that NAVCO was really fighting for because the only revenue that comes from the village council is the liquor license fee,” Sabido explained. “There are some villages that do not have any liquor license fee to collect because no bars exist in some of those villages and that means that they are not getting any income for the village. These trade licenses, however, will benefit all villages, because at least every village would have a supermarket, barbershops, tire repair shops, panades shop, etc. so this will create more income to the village council and they will have something to collect at ever interval which they can then use to invest within their villages.”
Requeña also told the Reporter that the proposed introduction of the trade licenses fees was necessary for the simple fact that there are some villages across the country that have expanded to the point where they can be classified as towns, such as Ladyville, Bella Vista, Independence, Hopkins Caye Caulker, etc. Requeña said that while the demand for these services has grown in these villages, the business establishments on the other hand hardly pay back any income into their communities. Business owners were also getting crafty by setting up their business in villages, to avoid paying trade license fees in the towns.
The Ministry of Rural Transformation, Community Development, Labor & Local Government will also have a mandate to ensure the accountability of the funds, how it is collected and is used by the village councils. Requeña has promised that his ministry will implement the necessary mechanism in an effort to have clear oversight of what they do with revenues.
Additionally, the recommendations for the introduction of a trade license have already been taken to Cabinet for approval. The Ministry is now seeking support from the Attorney Generals Ministry for advice and the drafting of the recommendations into law. It is expected that the new amendments will be introduced back to the house for final approval in November so that they could be rolled out at the beginning of the year.