Economist says Saint Lucia not in position to reduce VAT

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Economist says Saint Lucia not in position to reduce VAT
Economist, Richard Peterkin.
Economist, Richard Peterkin.

Saint Lucia cannot move to reduce Value Added Tax (VAT) on food or any other commodities at this time, due to the country’s current financial situation.

This is the view expressed by economist, Richard Peterkin, when asked to comment on whether Saint Lucia could make a similar move to that of the new Saint Kitts and Nevis (SKN) government.

“St Lucia cannot do that at the present moment. St Lucia has a high list of exempt and zero-rated items and so they have to be very careful if they continue to add items to that list,” Peterkin told St. Lucia News Online (SNO) in an exclusive interview.

Added to that, Peterkin said the country still has a high deficit to Gross Domestic Product (GDP) which is in excess of five percent, which the government is trying to bring down to at least three percent.

He suggested that the only way Saint Lucia would be able to do this, is to make sure that they have revenues; they don’t have a deficit in their current account or deficit to an extent cost.

Peterkin said that the country can’t borrow a lot more money for capital programmes too, which will ensure that the fiscal situation is stable.

“And it seem to me even though there was significant growth at least 10 per cent growth in VAT in 2014, the overall position still needs some work before we can start to look at the exemption or reduction,” he stated.

The economist told SNO that the move taken by SKN was a campaign promise and it is not unusual that the new government would move to implement what they have promised the people.

However, he said it is more than just a campaign promise. Rather, the current government must have had a look at the financial situation of the country, before they made such a decision to remove VAT.

“These days the fiscal implications of amending your VAT by rate or by removing items or putting items on a zero-rated list could be quite significant,” he explained.

He said the problem governments have is that they are not really in a position that they can simply give away, simply reduce revenue that they don’t need, in order to cover expenditure.

While Peterkin views this as a good thing from a political party point of view, he said SKN also has the highest rate on VAT in the OECS at 17 per cent, while Saint Lucia is at 15 percent.

“So they start in a position perhaps to have more revenue in a kind of a local context than some of the others might have, which might put them in a position to take certain items off the Vatable list, without having any significant implications to the overall fiscal condition,” he explained.

Additionally, in 2014 SKN had the highest growth of 4.5 percent and probably the lowest deficit per capita in the OECS region, as a result of a number of things.

Peterkin opined that the restructuring to country’s debt and also the global resident investment may have given the government a fair amount of additional revenue, which had some impacting growth.

“When your country is in a position of showing good growth of over three percent and low deficits, then you are in a position to make that kind of change without any major implications,” he added.

The economist argued that Saint Lucia’s fiscal condition is not as strong as SKN and as such, the country is not in a position to remove nor reduce VAT on certain items at this time.

“I believe that it is something that the government is still looking and trying to do. And people should try and encourage certain reductions too with hope that this could also happen here.”

The Lucian Peoples Movement (LPM) and the Civil Service Association (CSA) have called on government to follow in the footsteps of the SKN government, to reduce VAT on food.

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45 COMMENTS

  1. Economist...you have a Masters Degree in ECONOMIC...but not in ECONOMICS...so I understand...

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  2. Hilarious all these armchair critics who never went to school, can't read, can't write - now you're giving everyone your nonsense opinions like you know what you're talking about.

    COUNTRY FINISHED. TOO MUCH LOW IQ BEHAVIOUR.

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    • YOU ARE BEING CHILDISH AND DISRESPECTFUL THERE ARE VALID CONCERNS EXPRESSED I FIND IT RATHER STRANGE THAT HE HAS SAID NOTHING WITH REGARDS TO THE UNAVAILABILITY OF GOVERNMENT AND NIC AUDITED FINANCIALS FOR QUITE A WHILE NOW

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      • And why do you need him to ask about the financials of NIC and Government? Sad to say but he is not the auditor of NIC or of Government now.

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        • WELL IT IS UP HIS ALLY. REGARDLESS OF NOT BEING THE AUDITOR HE HAS SUCH A PROFOUND INTEREST IN GOVERNMENT AFFAIRS AND HOW THE COUNTRY IS OPERATED AND MONEY IS SPENT. WHY HAS HE NOT TAKEN AN INTEREST IN SUCH MATTERS IS HE A PAID SPOKES PERSON FOR THE SLP ? WHERE IS HIS INDEPENDENCE :)? I VIEW PERSONS LIKE HIM WITH SUSPICION WHEN THEY SPEAK AND TURN A BLIND EYE TO IMPORTANT MATTERS SUCH AS HOW GOVERNMENT ABUSES THE CITIZENS CONTRIBUTIONS AT THE NIC. HE SHOULD ALSO BE ADVOCATING FOR THE INCREASE IN POWERS FOR THE OFFICE OF THE DIRECTOR OF AUDIT. ACCOUNTING AND AUDITING IS HIS SPECIALTY AFTER ALL NOT ECONOMICS.

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          • Bravo! Bravo! Kudos! That was incisive. It sounded like a well-placed piece from a well-known soucere! Not all of us are idiots.

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  3. who is this white guy? LOTS OF S...T TALK.... what do you do for the poor people in ST LUCIA?

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  4. More revenue generation from fiscal growth rather than expenditure reduction is the key. VAT can be reduced by 8% in order to provide some relief to the poor.

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  5. It is amazing the crap that Lucians write whenever they get an open forum like this. You all should be ashamed of yourselves! It is so easy for a coward to sit behind a computer keyboard tablet or phone and type rubbish.... Mr Peterkin is making a very fair assessment of the current ecomonic situation in St Lucia and the ignorant fools on this forum have called him all sorts of names. Very disrespectful! He has nothing to lose by giving this information freely and listen up fools. Whether you all believe him or not do u think he cares and the situation he describes is very real and won't change by you calling him names. You are the ones suffering with y'all backward mentality. Now go on fools. Start cursing me because of my contribution. ...blah blah blah

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  6. Here we go again, its all about the messenger and not the message. Irrespective of which colour in power we have to deal with the situation.

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  7. YOU LUCIANS CANT EVEN COUNT LET ALONE UNDERSTAND GOVERNMENT SPENDING.

    The stupidity on display is breathtaking, that's why you'll never go anywhere.

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  8. I have a masters degree in economic and he knows that he made an error by his statement. . Bending on the government side

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  9. IT IS SO TRUE THAT THE UWP IMPLEMENTED VAT, BUT THE SLP HAS TAKEN FULL ADVANTAGE OF VAT, AND THIS IS NOT RIGHT ,IT IS TIME THE SLP RE EVALUATE THE CURRENT SITUATION ON THE IMPACT THAT VAT HAS DAMAGE THE COUNTRYS ECONOMY AND ITS PEOPLE. I CHALLENGE THE SLP TO LOOK INTO VAT WITH AN OPEN FIST, AND YOU WILL HEAR THE CRIES OF THE ST. LUCIAN PEOPLE. DO NOT WAIT FOR ELECTION TIME BECAUSE IT WILL BE TOO LATE, X COP

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  10. MR. PETERKIN WHO THE HELL ARE YOU. AND WHO DO YOU THINK YOU ARE.MR. PETERKIN YOU NEED TO BE FIRED. ST. LUCIA IS SPENDING TOO MUCH MONEY TOO QUICKLY. AND YOU CALL YOUR SELF AN ECONOMISY. ST LUCIANS NEED TO RISE UP AND HAVE YOU FIRED , BEFORE VAT ST. LUCIA WAS DOING FINE , WITH VAT IT IS A BIGGER PROBLEM. LESS WORK AND MORE POOR PEOPLE, DID YOU KNOW THAT ST. LUCIA WAS OPENING AN EMBASSY IN CHINA.? DID YOU ADVISE THEM ON THAT TOO , YOU FOOL. CHINA TAIWAN THEY ARE ALL THE SAME , AND ST, LUCIA WILL SUFFER BECAUSE OF YOU MR, ECONOMIST YOU FOOLISH MAN.

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  11. My main concern Mr Peterkin is to speed up the process so that staff members of SLGC can get the money the company owes them. Its 3 years now. Thats what you have to see about (the poor people) u got paid already check for the staff at the slgc in cap estate.

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    • YOU SAID IT YOURESELF HE GOT PAID ALREADY < THEREFORE HE IS NO LONGER CONCERNED ABOUT THE PLIGHT OF THE WORKERS HIS MONEY IN HIS POCKET ALLREADY YOU WILL NOT SEE OR HAIR ANYTHING FROM HIM AGAIN

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  12. My main concern Mr Peterkin is to speed up the process so that staff members of SLGC can get the money the company owes them. Its 3 years now. Thats what you have to see about (the poor people) u got paid already check for the staff at the slgc in cap estate.

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  13. JUST MAKES ME CRINGE WHEN I HEAR THE LIKES OF THESE "TECHNO QWACKS" WHO ARE SO FAR REMOVED FROM THE POOR EKING OUT A LIVING, ADVISING GOV'T AFTER GOV'T, THEN DRIVE THROUGH THE CITY IN ROLED UP WINDOWS. ALL THE LIKES OF HIM NEED TO JUST SHUT THE %@&% UP!!

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  14. Problem here is that this government isn't creative enough to generate new sources of income. Reducing any Vat is like taking away a portion of unemployment income from a disabled person (ie Labour party)

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  15. Politics, that's the name of the game. We need to look at the picture, Lucia is in no way ready to give away freebees at this stag. My problem with this administration is the fact that, they failed to trim the fat in the first year, having inherited a 7% accumulated deficit. That 4% increase to public sector workers was an error.

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  16. Richard Peterkin is an Accountant by profession and a holder of a Bachelor's degree in Economics. Notwithstanding his experience and ability, I would prefer an Economist someone who works in the field to speak on something as serious as VAT. It is quite obvious that the electorates are suffering and Richard needs to share some level of empathy for those people. While being a partner of PWC he is able to live an above average lifestyle, but he should be very careful with the comments that he makes, especially since there are persons whose annual salary is less than his monthly salary with or without his perks. VAT is obviously impact the majority and I believe that the Government need to seriously consider finding other means to raise revenue where a blanket rule is not imposed on all. The Government should find ways to tax guys like Richard a lot more than he is paying since he could afford it and let the persons who barely could make ends meet get some sort of tax relief. I could better my last dollar, that before elections government will start reducing VAT or removing VAT on the very items we have been begging them to.

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    • I agree with you 100% on tax guys like him a bit more when government moved to cut salarys they did not even consider the Judiciary or other high income owners in the public service the first thing that was consiered is the poor civil servants struggling to make ends meet