OPPOSITION Leader, Philip J. Pierre, says the 2017/2018 Revenue and Expenditure Estimates delivered by Prime Minister Allen Chastanet on Wednesday is risky and dangerous and will lead to the introduction of a structured programme by the International Monetary Fund (IMF).
Pierre claimed that the government inherited an improved fiscal performance when it entered government in June of last year, with Chastanet seemingly supporting Pierre’s claim when in summarizing the 2016/2017 budget performance, Chastanet stated that “there was a marked improvement in the fiscal position of central government, which was reflected in a narrowing of the fiscal deficit from a target of 3.2 percent of GDP in the budget to an estimated 1.4 percent of GDP.”
This performance, Chastanet said, was attributed to a reduction of $123.3 million in total expenditure from a target of $1.426 billion to $1.302 billion for the year. He said total revenue and grants also declined that year by $56.45 million to reach $1.107 billion.
“Based on these developments, the primary surplus improved significantly to reach 2.3 percent of GDP compared to the forecast of 1.0 percent of GDP in the 2016/2017 budget,” Chastanet said.
Pierre said the government inherited a primary surplus of $102 million but reversed that in one year to a deficit of $50 million.
“This amounts to a negative shift of $152.8 million. This government has plunged the country into a serious deficit financing. They have changed surpluses into deficits…It’s more than madness — it’s irresponsible,” Pierre said.
But while Pierre was forecasting gloom and doom for the country under the stewardship of Chastanet, the Prime Minister was forecasting a modest improvement in revenue growth and an expanded capital programme in support of stimulating economic activity for this financial year.
However, that did not seem to convince Pierre, who insisted that the government has consistently and persistently misled the people of St. Lucia.
To back up his arguments, Pierre referred to the government as once being against ALBA and Venezuela but was accepting funds and housing from the organization. ALBA is an inter-governmental organization based on the idea of the social, political and economic integration of the countries of Latin America and the Caribbean founded initially by Cuba and Venezuela in 2004.
Pierre said he could not understand why government transfers had increased to $18 million when the same contribution was made for the Sir Arthur Lewis Community College which the same government is attempting to upgrade into a university college.
He added that government was increasing the recurrent deficit by 109 percent in its first year and that in this financial year it is expected that the primary deficit will be $50.7 million which will be a reversal from the primary surplus.
Pierre said the overall deficit increased by $158 million, moving from 1.4 percent of GDP to 4.7 percent of GDP. He called on the government to compare that to what they inherited in 2016/2017.
“The government is leading this country down a dangerous path of scare tactics,” Pierre said.
He spoke of the government dismissing a warning by the St. Lucia Hotel and Tourism Association (SLHTA) not to reintroduce an airport tax as that move would have a negative effect on travel to the country.
The increase by $17.5 million in Excise Tax, Pierre said he could not understand, especially since investors get all kinds of incentives from the government.
Regarding the Value Added Tax (VAT), Pierre chastised the government for going back on its word to lower the tax and eventually eliminate it on getting into office, a promise it made in its ‘Five to Stay Alive’ slogan during last year’s general elections. He said the Estimates for this year show the projected income from VAT up to the year 2020/2021.
Pierre challenged the Prime Minister to tell St. Lucians that the tax would not be placed on goods and services that are presently exempted or zero-rated.
He argued that government may very well go in that direction seeing that government collected less money at one percent of the tax when it was at a rate of 15 percent ($22.4 million) compared to the 12.5 percent rate where it is estimated it will collect $24 million in 2017/2018 at one percent of the VAT.