SAINT LUCIANS should know by the end of October what the new rate of the Value Added Tax (VAT) will be.
The announcement came last Tuesday in the Throne Speech delivered by Governor-General Dame PearletteLouisy at the opening of the First Session of the Eleventh Parliament of Saint Lucia.
According to Dame Pearlette, government has already begun discussions with regional and international institutions towards conducting a true assessment of the State’s financial shape.
She added that the assessment is necessary since the Estimates of Revenue for the current fiscal year, despite being tabled and passed in Parliament by the last administration, were done so without any presentation of the policy considerations that informed those estimates.
Following those discussions and the comprehensive review of the estimates, the government hopes to present revised estimates that will be guided by new policy priorities for the rst of the 2016/17 fiscal year.
Prime Minister Allen Chastanet spoke to the media on Tuesday as he made his way to Parliament, saying that he hoped that all five promises made in the “Five To Stay Alive” plan, including a reduction and an eventual removal of VAT — are implemented in the government’s first 100 days in office.
“We’ve gone through the first review of VAT and we do have a CDB (Caribbean Development Bank) meeting tomorrow and the IMF (International Monetary Fund) and World Bank and the Eastern Caribbean Central Bank (ECCB) coming down to review what we’re doing,” Chastanet said. “We’re actually asking them to do an audit of where we are today, so we can agree on a work plan going forward.”
The Value Added Tax became one of the most debated campaign issues over the past year. While the former government maintained that the tax was necessary – contributing nearly $346 million to government’s coffers annually – the then opposition United Workers’ Party (UWP) described VAT as an oppressive burden.
During a May 12 public meeting held in the William Peter Boulevard, Chastanet outlined his “5 To Stay Alive” plan. A week later, the Saint Lucia Labour Party (SLP) held its own public meeting on the Castries Market Steps where then Prime Minister, Dr. Kenny Anthony, said removing VAT would result in a shortfall in revenue for government.
However, Chastanet countered the SLP’s argument, saying that with a reduced VAT rate, more people will be willing to invest in Saint Lucia, thereby creating more employment opportunities for the unemployed. He added that consumers, too, would benefit from reduced costs of goods and services.
On Tuesday, Chastanet seemed confident that government will be able to do what some claim to be the unthinkable: lowering VAT and then replacing it with a simpler, fairer tax. However, the opposition Saint Lucia Labour Party reiterated that it will hold the government’s feet to the fire with respect to campaign promises made, including reducing and removing VAT.
Meanwhile, politicians are not the only ones offering opinions on whether VAT should go or stay or what rate should be implemented come October. The VOICE put the question out yesterday asking people to quote what rate should be adopted by government. Three respondents suggested the following: “15%”, “10%” and “lower than 8%”.
As for the other four items in the “5 To Stay Alive” plan, the increase in the school transportation subsidy and school feeding programme will take effect in September.
Also, legislation to facilitate the introduction of the amnesty on outstanding hospital bills and a reduction in vehicular licence fees will be tabled at the next sitting of Parliament scheduled for next month. The moratorium on payment of taxes on residential property is expected to be implemented in the next fiscal year.