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12th July 2012
VAT Clears the Senate
M.G. George

The Value Added Tax bill did get the nod in the senate Tuesday but its passage was not a smooth one, as senators tugged at it from all directions - even-government senators, with at least one expressing reservations about the readiness of businesses for the proposed October 1st, implementation date.

But even while opposition senators called for the tax to be delayed on grounds that the timing for implementation was wrong and that the economy was not ready for it, independent senators were more concerned about the confusion that may arise in the early stages of its Implementation and what sections of the economy the millions of dollars collected should be pumped into to benefit the population.

And even as the Leader of Government Business in the Senate gave his government’s rationale for the implementation of the VAT in Saint Lucia at this time, underscoring the economic situation of the country and the need for this particular tax system despite its unpopularity with the increases in goods and services it will cause, Ezechiel Joseph, a former agriculture minister in the last government now senator pointed to a different rationale as the reason why government is going ahead with the October 1st implementation date.

Without displaying any evidence to substantiate comments he made as to why government is going ahead with the tax implementation in October, Senator Joseph said it was because of an increase in unemployment, to sustain the squandering of the economy, to pay for four new top positions in the prime minister’s office, to pay for four new permanent secretaries, to pay for special advisors at grade 21, etc., etc.

Science and Technology Minister, Senator Jimmy Fletcher challenged Joseph calling on him to produce even one shred of evidence to support his comments.

Senator Fletcher then attacked the reasons given by Joseph and systematically disproved each of them quoting to Joseph the old adage of persons living in glass houses not throwing stones.

But it was independent senator, Dr. Stephen King who really put a different perspective on the VAT debate Tuesday in the senate. Although he gave his support to the introduction of the VAT he called on the VAT office to be forgiving of businesses that may fall short while they get up to speed, calling for a probationary period of three months for a more forgiving approach.

“It is important that we recognize as residents of this beautiful country that every one of us must play a part in the development of our country and a tax system that allows more of us to contribute financially to this development is a step in the right direction,” Dr. King said.
 
 

This, he added, should give more people a sense of ownership and should engage them in discussing how public money is spent. He called on civil society to get more involved in the daily debate and decision making in the interest of the people’s development as this would make civil society stronger.

Senator King took the VAT and the promotion of healthy food consumption, two rather unlikely items, and fused them together explaining that the VAT can be an important factor in promoting healthy food consumption in Saint Lucia.

He questioned whether the VAT would help Saint Lucians eat less fatty and greasy foods, cook with less fat and oils, eat less salted foods, packaged seasoning and salty snacks, consume less beverages and foods preserved or prepared with added sugar, drink less alcohol and drink more water.

He then made the point that while government had exempt from VAT cane sugar and table salt, and subsidizes the former along with flour and rice, one objective for that being food security for low income earners, the subsidies for the three basic food items is not the best approach by government.

“Low income households deserve to have healthy food. If not, we are ensuring that poorer people will suffer more ill health from chronic non-communicable diseases such as diabetes, hypertension and cancer,” Dr. King said.

He added that the VAT debate creates an opportunity for Saint Lucians to develop a strategy and phase it into achieving stated objectives like low income households having adequate quantities of fresh local agricultural produce; public money invested in local agricultural production, rather than hemorrhaging into other economies; expansion of local market for local agricultural produce and for a more vibrant, productive agricultural sector which will better assure national food security.

Senator King called for food vouchers being redeemed to subsidize the purchase of fresh local produce a programme that could be funded by shifting the subsidies on rice, flour and sugar to the food vouchers with additional revenue to support that programme from the vat on sugar and salt.

He called on the government to revise the country’s food security strategy using the vat implementation as an opportunity to do so.

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