Despite reservations among lawmakers about business readiness, operational costs and timing, the St. Lucia Senate has passed the Value Added Tax (VAT) Act, keeping the legislation on course for the revised October 1 implementation date.
With the law’s assent by Governor General Dame Pearlette Louisy, St Lucia will become the last member state in the Caribbean Community (CARICOM) single market but Montserrat to introduce the sales tax that is intended to replace a raft of taxes and duties. St Lucia’s VAT is to be levied at 15 per cent on goods and services and at eight per cent in hotels.
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.
The value added tax or general consumption tax is now common across CARICOM.
In early July, CARICOM associate member Turks and Caicos announced it will introduce VAT at eight per cent – the second-lowest rate in CARICOM, with Haiti’s rate at ten per cent, Suriname’s dual tax rate of ten per cent on goods and eight per cent on services, and just ahead of Belize at 12.5 per cent.
The rates elsewhere in the region are: Antigua and Barbuda 15 per cent; Barbados 17.5 per cent; Dominica 15 per cent; Grenada 15 per cent; Guyana 16 per cent; Jamaica 16.5 per cent; St. Kitts and Nevis 17 per cent; St Vincent and the Grenadines 15 per cent; and Trinidad and Tobago 15 per cent.
The Bahamas, which is not a member of CARICOM’s customs union or any of its economic arrangements, including the single market, is contemplating the introduction of the tax.
