Geoffery Devaux has joined a chorus of criticism against the new tax describing it as “one of the most insensitive, out of step decisions” he has seen for a long time.
“If VAT does come to St. Lucia and I hope it never does, then as a minimum the electorate should demand a referendum, the essence of which would be to tell government, yes you can have your 15 per cent tax but this amount of 15 per cent will never change unless agreed to in a future referendum.
“After all it will affect us all so why can’t we not vote on this?” he said.
Devaux, who has headed a number of private and public sector financial institutions here, has argued that the VAT would result in an increase in the cost of living and the poor would be the most affected.
He said while governments need funds to run a country, in the case of St. Lucia successive administrations have done “a pretty good job without VAT.
“Why then the sudden urge, even if it has taken 10 years to introduce a tax that will be felt more by the poor as well as retard economic growth.”
The VAT goes into effect on October 1 after the government agreed to a one month extension of the fiscal measure.
But several organisations and businesses such as the St. Lucia Chamber of Commerce, the St. Lucia Manufacturers Association and the main opposition United Workers Party (UWP) have been calling for a further postponement of the tax until the economy improves, or at least until the start of the New Year.
“Some members of the business organisations say they are still far from the ideal preparation for VAT, while others have delayed the registration process adopting a wait and see approach,” says Karen Fowell Programme Officer with the Chamber of Commerce.
Some businesses admit that they are still confused about certain aspects of the VAT and expect some clarity ahead of the October 1 implementation date.
St. Lucia is the only member state within the seven-member Organisation of Eastern Caribbean States (OECS) yet to implement the 15 per cent VAT.
The VAT Implementation Office has been meeting with business organizations, professional bodies and consumers throughout the island and has embarked on a multimedia education campaign in an effort to get the country VAT ready for October.
For its part, the UWP has started a number of protest meetings across the island in a bid to force the government into scaling back the measure.
But Prime Minister Anthony has accused the opposition of being hypocritical, reminding the population that the UWP, when in office, had supported the tax measure and would have been implemented in April this year had the party won the general elections last November.
Opposition Leader Stephenson King while admitting to an April implementation dateline in his government’s budget presentation last year, he also made it clear that the implementation of the tax would have depended on the strength of the local economy.
Devaux in a statement published in the media here ridiculed the VAT as a “Very Annoying Tax” and wondered whether or not the authorities could not have raised the funds needed through “normal taxes”.
“Could we not charge more for imported items if indeed additional revenues are needed? For example a tax at the port of entry would be so much easier to collect. If some world body would say this is illegal, then find some way around it.
“For example incorporate a company, St. Lucia Incorporated, make every citizen a shareholder of the company which does one thing, it buys all goods that comes to St. Lucia and then sells them for a profit to the persons whom originally wish to import these items.
“No duties, no tariffs, no levies only profit. These profits are then taxed 100% by government and so the treasury gets its revenue. It is an example of thinking outside of the box, the legal minds can dress this up, but it is an alternative to VAT,” Devaux said.
Devaux said that there is a “good reason” why St. Lucia had become the last OECS member state to implement the tax.
He says when the debt to gross domestic product (GDP) ratios for all OECS and CARICOM countries are compared for 2011, apart from oil-rich Trinidad and Tobago, St. Lucia has the lowest debt to GDP ratio.
Devaux recalls that in 2001, Governor of the Eastern Caribbean Central Bank (ECCB), Sir Dwight Venner, noted that with respect to St. Lucia “the bank reports an improvement in the overall fiscal of Central Government and says the islands debt ratios continues to remain within sustainable limits, now standing at the lowest among ECCB member states.”
He said the situation remains the same in 2011.
“Could it be that by now introducing VAT we will join many of those countries including those in Europe and North America who all have VAT, yet have debt to GDP ratios much worse than ours and with a few exceptions are heading for precipices of economic collapse?
“Why do we wish to make our already stagnant economic pool more dangerous by introducing the VAT mosquito? Surely following the tail has not been the economic legacy of this country, why do it now,” the accountant asked.
He said that St. Lucia has always had attractive tax packages and this is what has largely been responsible for the fiscal stability that governments have been able to achieve.
“No tax on foreign pensions, no tax on capital gains, no tax on dividends, concessionary capital allowance deductions, concessions to hoteliers and to manufacturers, concessions in agriculture and up until now No VAT.”
CMC/es/pr/2012