Tax savings for thousands of Saint Lucians under new tax reform

By Office of the PM

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PM Hon Allen Chastanet

(PRESS RELEASE) — In a Budget Address that centred on people-centric growth and bringing relief to Saint Lucians, Prime Minister Honourable Allen Michael Chastanet announced personal income tax reform that would see thousands of low-income earners pay less and in some cases no personal income taxes.

This is a bold initiative and in keeping with the government’s promise of less onerous taxes on the people of Saint Lucia.

Under the theme “Growth by Empowerment for a Better Future” the minister for finance presented the Appropriation Bill 2019-2020, which focused on “opportunities that will propel every Saint Lucian to an acceptable standard of living and offer the chance to build wealth for themselves and their families”.

Part of this plan, explained the prime minister, was the reform of the personal income tax system to make it simpler, more progressive and less burdensome.


During his presentation to the House of Assembly on Monday, April 15, 2019, the prime minister explained the challenges and disadvantages of the current system, among them: the burdensome filing of a number of documents; many individuals find the tax computation complicated with the four tax bands and four tax rates; the system is not sufficiently progressive, as the greatest burden of taxation does not always fall on the higher income earners.

The prime minister explained that the new regime seeks to provide income tax relief to lower income earners.

“A large number of low-income employees will no longer be required to pay personal income tax, while others will benefit from reduced tax liabilities,” said PM Chastanet. “However, high income earners will be expected to pay more as a result of the progressive nature of the tax system. As such, the new regime is expected to be revenue neutral with no adverse impact on the government’s revenue collections from PAYE.”

Expected to come into effect January1, 2020, the new system will be as follows:

* The personal allowance will be increased from $18,000 to $23,000. What this means is that for an average income earner, the first $23,000 of annual income will be tax free;
* There will be three (3) tax bands with the following rates:
(i) The first $0 to $10,000 of chargeable income will be taxed at a rate of 10%,
(ii) the next $10,001 to $20,000, at a tax rate of 20% and
(ii) the remaining amounts above $20,000, at a tax rate of 30%;
* Limit the amount of total deductions that can be claimed up to a maximum or cap of $25,000 in any given year.
* Restrict the number of allowable deductions to the following four categories: housing deductions, future and financial benefits, medical deductions and child and education benefits.

The prime minister then demonstrated in detail how progressive this new system will be with low earners as beneficiaries.

“An employee with annual earnings of $26,000 and allowable deductions of $5,000 pays tax of approximately $300 under the existing regime. However, under the new regime, this employee will not pay any tax, resulting in a savings of $300,” he noted. “An employee with annual earnings of $50,000 and allowable deductions of $10,000 pays tax of approximately $2,900 under the existing regime. However, under the new regime, this employee will pay $2,400, which is a reduction of $500.”

The minister for finance further noted that pensioners and persons 60 years and over, will not pay any tax on the first $31,000 of their income compared to $24,000 under the current regime.

Preliminary assessments of the proposed reform showed that for a given year, over 11,000 persons or approximately 50% of filers will pay lower personal income taxes under the proposed regime.

The prime minister added that the greatest number of beneficiaries under this reform are individuals earning incomes ranging from $20,000 to $30,000 and $30,000 to $40,000.

“In these two income brackets, some 3,570 and 3,280 individuals will benefit. My government anticipates significant tax savings for the majority of individuals who will be better off under the proposed tax regime,” stated PM Chastanet.

The prime minister said it is anticipated that the entire country will benefit from the new tax regime and this will have a spill-over effect on the economy as a whole as consumer spending power will increase.

(6)(3)
This article was posted in its entirety as received by stlucianewsonline.com. This media house does not correct any spelling or grammatical error within press releases and commentaries. The views expressed therein are not necessarily those of stlucianewsonline.com, its sponsors or advertisers.

20 comments

  1. The tax is designed to get people get paid more to pay more taxes. The restrictions on deductibles mainly affect the rich because poor people don't seek medicals at Tapion neither do they have mansions at Cap. The people trying to critique this i guess all over the 40,000 per year. If the PM did tax reform like Trump and give the breaks to the rich then everyone would be complaining that he is for rich people and not the malayway. Well we all cannot have it our way.

    (2)(3)
    • Agreed, but do you think making 40 or even 60 thousand dollars makes u 'rich' in st. Lucia?

      This barely reduces taxes by $50 a month for lower income individuals. Someone who makes 28,000 a year currently pays less than 1000 in taxes a year, which is less than $50 a month, already very low as it currently is.

      So this was not to help lower income people really.. It is just a way to tax higher income earners more. Again, the cost of living in st. Lucia is very high, so I think this unfairly penalizes the middle class, who is the backbone of any economy. When somebody earns 60K a year and they have student loan, mortgage, car loan, is it fair to penalize them further?

      And the deductibles used in that table are unrealistically high

      (2)(0)
  2. That's downright communist. And what about the lost revenue from those taxes foregone. It will come from people who worked hard to make a better living for themselves. In the very same vein it will continue to encourage those who clearly have no desire to better themselves to keep striving for nothing. How about you scrap PAYE and charge VAT on everything. Everyone will pay their fair share based on what they use.

    (2)(1)
    • Stop trying to indicate that the only reason people are not making money is because they are not working hard. Some people are hard workers have their masters and bachelors and still not promotion or big job.

      (1)(0)
    • So how come the government made more money by lowering the VAT rate? It is not high taxes which creates revenue but the level of compliance.

      (0)(0)
  3. Is Sandals among the low income earners ?

    (3)(2)
  4. What kind of a salop pays taxes. Seriously.

    (1)(0)
  5. I also want to know how they plan to ''Restrict the number of allowable deductions to the following four categories: housing deductions, future and financial benefits, medical deductions and child and education benefits''

    Why would you restrict deductions on such important things like housing deductions, future and financial benefits, medical deductions and child and education benefits?

    Inhumane...

    (9)(1)
    • There is a big difference between "Restricted to" and the "restrict on" like you are claiming. Is either you genuinely don't understand English or you are trying to create chaos. The PM said 'restricted to" which means that is the only thing that will be included. Just in case you genuinely don't understand.

      (0)(3)
      • Are you sure that this is what was meant - in my opinion, it can mean either.

        But idiots like you always try to undermine the intelligence of others who likely have a higher intellect than the likes of you.

        (1)(0)
    • It's not restricted as in deleted. The amount total is just limited to a total of $25, 000

      (1)(0)
  6. So you are removing the $5000 Credit Union Share deductible ? That is unfortunate as it help person save their money better.

    (5)(3)
    • We always look upon ourselves rather than upon the other who is less fortunate. There are some people who cannot even afford to save yet you are complaining about being unable to save better. See how we are selfish! Why should the government give you an incentive to save your own money? Besides the government would be more interested if you could spend that money back into the economy. Duh.

      (0)(4)
  7. This is awful. Why not try to help "everyone". I did the calculations and I pay the exact same next year as I did this year if my chargeable income is the same. So somebody making a little 5 grand - which sounds like a lot but is really not much in St. Lucia - still cannot buy a piece of land or a house. Considering that people already have to pay 15% VAT on everything they buy. Which means that the government makes hundreds of millions of dollars now pretty much "out of the blue" that they never made before, but still cannot give everyone a tax break.

    Do you know recently I contacted a real estate agent and asked if they can find me a piece of land no less than 5,000 sq ft no more than $100,000 (which is $20 per sq ft) and they told me - I am sorry but your budget is not high enough. Imagine this.

    I understand taxing the "rich" but sir, making $60,000 does not make you rich in this country. I was really looking forward to this tax reform, hoping to God that the government would not increase the tax percentages on the chargeable income brackets, but this is exactly what they did, disguising it as tax reform when they know full well that many average people will now be paying much more in taxes.

    I am not a political person - I am neither here nor there - but this was the one issue that I was waiting on to make my decision about how I will vote in the next election. You guys will definitely NOT be getting my vote for sure. Sick of all of y'all.

    (20)(2)
    • So 3,570 and 3,280 = 6850 persons will benefit from this. In a country of over 170,000 people. WOW, government of St. Lucia - how dumb do you think people are.

      All big companies getting tax breaks, land being sold to foreigners at next to nothing, but squeeze the f!%*k out of your own people. A shame.

      (21)(1)
      • All 170,000 don't pay taxes.

        (1)(0)
        • Exactly, but they are presenting this like it is something meant to affect so many people positively.

          If they were really aiming for that they would significantly reduce the rate of VAT which is the one tax that NO ONE can escape. But they know exactly what they are doing, and they should just say so instead of lying about saving low income earners money on taxes. Most of these low income earners will save less than 50$ a month

          (2)(0)
    • Also, in the table above, how is Other Allowable Deductions for Employee D listed as $40, 000 when the information provided above for the new "tax reform" ALSO says that there is a cap of $25,000 on deductions per year?

      AND why exactly would a government FOR THE PEOPLE "Restrict the number of allowable deductions to the following four categories: housing deductions, future and financial benefits, medical deductions and child and education benefits."

      These are all very important deductions - so our government thinks it is a good idea to restrict housing deductions, medical deductions, child and education benefits. WOW just WOW.

      I am truly baffled by this.

      (6)(1)
  8. Stop trying to be brighter than God. There is no such things as no tax for low income owners. Tax should be a fixed percentage across the board.

    (8)(6)

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