Letters & Opinion

5 To Stay Alive’ or ‘5 To Die’ – Which is it, really?

By Stephen Lester Prescott

I really enjoyed hearing George ‘Fish’ Alphonse’s poem entitled Auction Time. Unfortunately, I cannot remember the lyrics so I am left to improvise…

St Lucia sold for $1/acre…
Pigeon Island sold for $600…
St Lucia Fish Marketing Board sold…
Derek Walcott House sold…
St Lucia Marketing Board sold…
Radio St Lucia sold….
Owen King EU Hospital sold…
St. Jude Hospital sold…

This literary piece literally brought to mind the tone of the last UWP election campaign: ‘Going, Going, Gone!

This Government came to office after the UWP ran a campaign on promises of Relief from the High Cost of Living, including High Fuel Prices, Inflation and VAT. (Now, I don’t know about you, but I am eagerly awaiting this relief!)

In fact, one of their Election Campaign pamphlets said the same:

Going, going, gone! We will immediately reduce the rate of VAT, with a view to further reducing it until it is completely replaced…”

One can assume that this idea came from the supposed UWP Economic Guru now in charge of the Ministry of Finance. It sounded good on the campaign trail, as VAT was made to sound and look like the oppressive tax and Labour was the “wickedest” administration.

Consumers are also still waiting for the ‘Ching-Ching’, but it’s still nowhere to be seen in anyone’s pockets. In fact, we don’t even hear it ringing, far less to see it coming.

As we prepare for PM Chastanet’s Second Budget Presentation, does anyone expect that he will again deliver that same old promise to reduce and eventually replace VAT?

As we should all know by now, VAT was inevitable for St Lucia. Nearly all the other OECS member-states had done it and we were one of the last countries in the region that had not implemented it — and besides, the country badly needed that revenue stream.

Minister-extraordinaire Ubaldus Raymond will agree with this now, as he is running around trying to block the hole left by the $52 million that has been lost due to his and his Prime Minister’s VAT reduction.

The irony of the vehement opposition by Allen Chastanet is that this was supposed to have been a process initiated by the then UWP Prime Minister, Stephenson King with establishment of a VAT Office. The fact is, however, that there was no other choice, so King had to bite the bullet.

The other fact is that Allen Chastanet also sat in the same UWP Cabinet that started this process after Sir John Compton died in 2007 and King took over.

After the UWP lost the 2011 election, the Kenny Anthony Administration had the courage to continue to implement the often-maligned and very unpopular VAT. And when the Labour Government announced plans to introduce it in 2012, Allen Chastanet, who claimed to so care for the “poor people” of this country, went on a sustained campaign across the country against it. His own colleagues say he asked the Private Sector and asked all members of the St Lucia Hotel and Tourism Association (SLHTA) to cut all the local staff by 10%, all in an effort “to teach Kenny Anthony a lesson.”

The reality, though, is that VAT provides greater revenue security to the state in its capacity to undertake varied interventions and many had warned the Prime Minister about its removal.

Let’s refer to the International Monetary Fund (IMF), which has officially said the following on VAT (which is on record and available to both PM Chastanet and his Finance Minister):

St. Lucia: Staff Concluding Statement of the 2017 Article IV Mission: February 6, 2017

“The new administration is launching an ambitious program of economic reforms, but key policies are still being shaped ahead of the forthcoming budget. The broad pro-growth reform agenda is focused on lowering the tax burden, enhancing the efficiency of the tax system, and reducing tax compliance costs; reorganizing the public sector to rationalize functions and increase efficiencies; reviewing the Citizenship by Investment Program (CIP) to make it more competitive; and enacting structural reforms to improve the business climate and encourage foreign direct investment. This program addresses many areas that are critical to strengthening St. Lucia’s growth potential, but details of the policies are still pending and many of the reforms will take time to yield results. In the meantime, the fiscal package announced by the government under the “Five to Stay Alive” initiative, which includes a reduction of the VAT rate from 15 percent to 12.5 percent, will weaken the fiscal position unless measures are taken to mitigate its impact; and, by shifting the tax burden onto the tourism sector, risks having undesirable effects on competitiveness and growth.”

The IMF also said the following in its document entitled ARTICLE IV CONSULTATION—PRESS RELEASE STAFF REPORT MARCH 2017:

“The deterioration of the fiscal position, which has been accelerated by the recent fiscal package, should be addressed promptly and decisively in the context of the forthcoming budget. In the absence of corrective measures, financing difficulties will increase and force inefficient fiscal adjustment—typically by reducing already low capital spending—with negative effects on growth. At the same time, public debt will continue to increase with unsustainable dynamics.”

In essence, dear readers, the IMF was and is basically saying that we are heading down a slippery slope and the loss of the $52 million in revenue after the first 12.5 %VAT reduction was not looking good for the country.

The question the citizens and voters of this country now need to seriously ask the Prime Minister is: How will he curb this deterioration of our economy?

The other question (for both the Prime Minister and his Finance Minister) is: Should the populace now prepare itself for the usual dreaded IMF Structural adjustment measures?

As Prime Minister and Minister of Finance, Dr Kenny Anthony, to his credit, took all the unpopular hard decisions to ensure that this country never went to the IMF. But Allen Chastanet comes in – and in one swoop he is getting us ready to go to the IMF “on bended knees”.

Awah Wee! Instead of giving us the promised ‘Five to Stay Alive’ what we have started seeing after 20 months is that our country is on the IMF Auction Block and will soon be sold to the cheapest bidder after the IMF says: ‘Going, Going, Gone!’

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