One of the recommendations coming out of a joint Caribbean Development Bank (CDB) and Eastern Caribbean Central Bank (ECCB) report which looked at Saint Lucia’s overall economic performance, was to reduce the number of items on the Value Added Tax (VAT) exemption list.
But Senator Dr. Ubaldus Raymond, a minister within the Ministry of Finance has said that the government is yet to decide whether it should go in that direction, even when there is enough evidence that shows that the long list of VAT exempted items could prove to be burdensome, in light of an incoming VAT reduction.
“The administrative cost…the burdensome administration just to undertake the VAT with all of these exemptions, you are talking about 131 exempted items and 107 zero-rated items. This is actually causing more pain to the administrator and the tax payer,” Dr. Raymond said.
Opposition Leader Phillip J. Pierre said the government must be straightforward with Saint Lucians and tell them that they will have to remove items from the zero-rated list.
He pointed to the situation in the twin island republic of Trinidad and Tobago, where the new government moved to reduce the VAT and was forced to also reduce the items on the zero-rated list.
Social commentator, Richard Peterkin had told St. Lucia News Online (SNO) in an interview months before consideration was even given to a reduction in VAT by the current administration, that the country has a high list of exempt and zero-rated items and it must be very careful if more items are added to that list.
Peterkin had said too that the country still has a high deficit to Gross Domestic Product (GDP) which is in excess of five percent, which should be brought down to at least three percent.
He suggested that the only way Saint Lucia would be able to reduce VAT, was to make sure that the country have revenues; there is no deficit in the current account or deficit to an extent cost.
Nevertheless, the current administration has kept it’s promise to reduce VAT by 2.5 percent, which will be officially implemented in early 2017, and is being considered the first phase of the reductions.
Dr. Raymond said, “We are hoping to have a further reduction sometime next year. The announcement will be made very early in the year, sometime January or February.”
Although the CDB report has also recommended that government reduce the public sector workforce, the minister said this is not something that the government plans to do.