BUDGET SPEECH 2019/20

Today, the Financial Secretary, Dax Richards, delivered the 2019/20 Budget Speech for St Helena.

In his opening remarks, the Financial Secretary said:

“For the past two consecutive years it has been necessary for Members to endorse a rollover budget, but today I’m afforded great pleasure in presenting a balanced budget prior to the commencement of the new Financial Year 2019/20.

The Budget presented today is the product of collaborative working between Elected Members, officials and other key stakeholders including the UK Government.

The Budget is presented following agreement of the Financial Aid settlement of up to £31.8 million for the financial year 2019/20. 

The Financial Secretary added:

“This next budget period will continue to be a challenging but exciting period for the Island.

 “For a small Island in the middle of the South Atlantic with less than 5,000 people we are certainly punching above our weight and we have achieved a lot during these challenging times.

 “With an increased budget for 2019/20, the prospect of a multi-year Capital Programme, and through the reforms I have just outlined St Helena is in a much better position to turn the corner and to experience some real sustainable economic growth during this transitional period. In my humble view there is some light at the end of the tunnel.”

 The Motion to consider the Appropriation Bill 2019 now stands adjourned until Thursday, 28 March 2019, when the details of the Bill will be debated by Legislative Council.

 Highlights from the 2019/20 Budget Speech include:

• Total recurrent public spending is planned to be just under £46.1 million in this financial year.  Representing a net increase of £5.2 million (12.7%) in comparison to the previous year
• £3.5 million of this increase is mainly to incorporate the funding for St Helena Airport operations that was previously delivered under the Airport Project
• Total financial aid for this financial year will be £31.8 million 
• Spending on core Health services will increase by £372,000 (10.6%), while spending for aero medical evacuation and overseas medical treatment will decrease by £500,000 but will be supported by the Call-down Fund under the financial aid package should the need arise
• Spending on Safeguarding will rise by £153,000 (5.4%)
• Spending on Education will remain broadly the same as the previous year
• Spending for Corporate Finance for payments on behalf of the Crown will increase by £310,000 (3.8%) which is attributable to the increased subsidy for the St Helena Fisheries Corporation and subsidy for St Helena Hotel Development Ltd
• The Basic Island Pension (BIP) and Income Related Benefits (IRB) budget will increase by £204,000
• Total forecast local revenue for the year is £14.0 million
• For income that relates to primary production, the exportation or import substitution of goods and services a reduction in tax for companies from 25% to 15% and for self-employed businesses from 26% to 21% for the first £18,000 and from 31% to 26% for chargeable income over £18,000
• The basic rate of tax for others remain at 26%, personal tax allowance stays at £7,000 and income tax paid by companies stays at 25%
• Customs duty on tobacco and tobacco products will increase by 5.3% and will mean that the duty on a packet of 20 cigarettes will increase by 21p
• Customs duty on alcoholic beverages will increase by 2% and therefore duty on a can of Castle Lite will increase by 1p and duty on a one litre bottle of spirit will increase by 36p
• Other recent changes to the Customs & Excise Regulations include the reclassification of parts of the tariff from the 20% bracket to the 5% bracket and these include: revision guides and academic books, sight correcting glasses, sanitary and family planning products, biodegradable cartons, boxes and cases and textiles imported by commercial clothing makers and upholsterers
• The Investment Tax Credit scheme has now closed and has been replaced by the new Approved Investment Scheme
• Changes to Stamp Duty include exempting first-time home owners and house builders to the value of £100,000, and introducing stepped rates of 2.5% for transactions between £10,000 – £150,000, 3% for transactions between £150,000 – £500,000 and 5% for transactions over £500,000.  An additional 2.5% Stamp Duty applied to the purchase of second homes
• FCO funding of £0.3m to address specific areas of security
• In 2019/20, the inflation expectation is 4.3%

The full Budget Speech is available on the Finance page of the SHG website at: https://www.sainthelena.gov.sh/finance/

Direct Link – https://www.sainthelena.gov.sh/wp-content/uploads/2019/03/Budget-Speech-2019-20.pdf

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SHG

25 March 2019