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Monday, July 16, 2012

St Lucians to get VAT

CASTRIES, St Lucia, Monday July 16, 2012 – St Lucians will be joining their peers in Antigua and Barbuda, Dominica and Grenada in paying 15 per cent in Value Added Tax (VAT) before this year is out.

That is because the St Lucia Senate has passed the VAT Act, and everything looks on course for the revised October 1 implementation date.

St Lucia will now become the last independent member state in the Caribbean Community (CARICOM) to introduce the indirect tax regime that will replace a current slate of taxes and duties. While VAT on goods and services are to be levied at 15 per cent, it will be at eight per cent for the hotel sector.

In the rest of CARICOM, Barbados levies 17.5 per cent VAT; St. Kitts and Nevis, 17 per cent; Haiti’s rate is 10 per cent, Suriname’s dual tax rate of 10 per cent on goods and eight per cent on services, is just ahead of Belize at 12.5 per cent. Montserrat has no VAT system.

According to the Caribbean Media Corporation, during last week’s parliamentary debate there were calls from two independent senators – a doctor and a hotelier – for a further delay in VAT, and government Senator Debra Tobierre, a business owner in the south, admitted that all of her questions on the indirect tax were yet to be answered.

But she supported the bill while at the same time making a call for more public information during the transition to the tax.

The independent senators, Dr Stephen King and Berthia Parle, said they would have preferred to see a delay in the full implementation of VAT to give businesses more time to prepare.

Dr King, a former chief medical officer, suggested a “testing period” of up to three months and a “forgiving period” of at least one month “before going live”.

But he argued for the use of VAT revenue to avert “a major crisis” in the country’s health services and to encourage better nutrition among St Lucians.

He said that operation of the new hospital to be completed by year end and a reconstructed St. Judes Hospital in the south would require an additional 50 million EC dollars (18.5 million US dollars).

Senator Parle, a veteran hotel executive, acknowledged that no member of the formal business community was opposed to the VAT.

“We understand the imposition of VAT but there are serious concerns,” she said.

Leader of Government Business and Minister of Home Affairs Senator Phillip La Corbiniere presented the bill from the lower house with the admission that VAT in any country would lead to both price rises and cuts for consumers.

But he informed members that most food items had been placed in a “VAT-exempt food basket.”

In response to concerns about the fate of prescription medicines in the VAT legislation, Senator La Corbiniere said Castries had applied to the CARICOM Secretariat for the removal of all import duties on medicines.

The minister said his eight-month-old administration came to office facing “a very challenging economic period which made it even more difficult to raise revenue which is going to be needed to sustain employment and support economic growth.”

He said it is with that kind of challenge in mind that government has had to face the “inevitable implementation” of the Value Added Tax.

That prompted opposition senator and former agriculture minister Ezekiel Joseph to claim that the governing St. Lucia Labour Party had changed its position on VAT, claiming that Prime Minister Kenny Anthony once referred to it “as an oppressive tax” which his party never considered it as the wisest choice for St. Lucia


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