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Opposition Leader Arnhim Eustace (File photo).

KINGSTOWN, St. Vincent – Prime Minister Dr. Ralph is not forthright with citizens about the impact of the fiscal measures announced in this year’s budget, says Opposition Leader Arnhim Eustace.

Gonsalves, who is also Minister of Finance, announced in his Budget Address on Jan. 9 that owners of properties with a market value of more than EC$25,000 will this year begin paying 0.08 per cent of the value of the property in taxes.

This 15 per cent increase will generate EC$3.2 million more in revenue this year, according Gonsalves, who also announced increased excise tax on beverages, vehicles, and tobacco.

But Eustace said at a New Democratic Party press conference on Tuesday that Gonsalves understated, for political reasons, the amount of money the new property tax rate will send to the Treasury.

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He noted that in addition to increased rate of taxation, about 10,000 more properties would be taxed.

“I believe the amount collected from the taxpayers will be much higher than the [EC$3.2] million. I believe that figure is set for political reasons,” Eustace said.

The former minister of finance spoke of the implication of the tax, saying property owners would pass on the increase to their tenants.

He said that a woman has said that she was informed that her rent would increase from EC$700 to EC$800 per month, about 14.29 per cent more.

“So those persons who are renting can expect that their rent will go up. So less of their own money will become available to them for their uses,” Eustace said.

He further noted that Gonsalves announced that cooking oil, salt, yeast, baking powder, shortening, sanitary napkins, baby diapers, toilet tissue, and underwear garments would be changed from zero-rated to exempt on the value-added tax (VAT) list.

Eustace said that exempt and zero-rated both do not attract any VAT. “So, if you put exempt you still not going to pay any VAT,” Eustace said.

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Prime Minister and Minister of Finance Ralph Gonsalves (File photo).

“What he (Gonsalves) didn’t say, [is that] when you have a business and more than 10 per cent of your sales come from items that are exempt, you don’t get back all the VAT that you paid in the first place,” Eustace further stated.

He said that previously, businesspeople would get a tax return on the VAT they paid to the Customs. However, according to Eustace, the more items that are exempt, the higher the chance that a business would exceed the 10 per cent exemption threshold and there get back less VAT.

“And when they get back less VAT, they then have to turn around and pass it back to you, the consumer. That is why he (Gonsalves) mentioned it as a revenue item,” Eustace said.

“So that is the purpose behind that. But the explanation was not given that I am giving you now. So the government will get more revenue and the public will pay a higher price for the goods that are sold by that business,” Eustace further stated.

Eustace spoke of the increased excise taxes on beverages, tobacco, and motor vehicles, which Gonsalves said was part of the Wellness Revolution thrust.

“What they really doing it for is to increase revenue. Let us call a spade a spade,” Eustace said.

He further noted that excise taxes tend to be heavier and would will lead to higher prices on cars, tobacco, non-alcoholic beverages and alcoholic beverages. “That ain’t nothing about no Wellness Revolution,” he said.

Eustace further said that the water rate was being increased even as hundreds of consumers with arrears have had their service disconnected.

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