Leader of the Opposition, Godwin Friday, says that the 1 percentage point increase in the rate of Value Added Tax announced by Prime Minister Ralph Gonsalves on Monday is, in essence, the second increase in the tax in two years.
Responding to the Budget on Tuesday, Friday said that the government had planned to increase the tax since last year, but recoiled after the opposition New Democratic Party announced the plan to the public.
“And we said that this was not acceptable at a time when the country is going through such difficult times and poor people can’t make ends meet,” he said.
He noted that the Ralph Gonsalves Unity Labour Party administration had denied planning to increase the tax.
“But they didn’t raise the rate. What happened, they came into Parliament and they added a lot of basic items, like cooking oil and butter and chicken –not neck and back, but the good parts of the chicken — and salt. They added all those things onto the VAT, so you started paying tax on them. So all these basic items that used to be exempt, they were added. That, in effect, is an increase in the rate of VAT,” Friday said.
“So this year now, on top of the increase that took place last year where new commodities were added, then it means that people were paying more VAT to the government,” Friday said, noting that the government has now added a one percentage point across the board.
“So the same items that were added last year, that were exempt before, you are now paying VAT on that and you are adding more on top of it this year. I mean, come on. How can we support this? We know the difficulties that people are going through in this country. We said it, you know.”
He speculated that next year, the government will increase fees on vehicle registration, which he said is so high now that some persons have parked up their vehicles.
“So, Mr. Speaker, these are two increases in VAT in two years and we do not support that. We think that the people of this country, they need a break too, not just government finances. They want to go to the grocery stores and know that they don’t have to pay more for things because of VAT and they have to put back more items because they can’t afford to come out with them in their grocery cart. It’s simply not fair.”
Friday expressed hope that Vincentians understand that the opposition is standing up with them and make their voices heard as well and tell the government no.
“You just can’t go around spending money left right and centre and then you come in Parliament and say let’s go get some more for VAT,” he told government lawmakers.
“We have to stand up for the poor people of this country and I know that they (the government) say they are the government of the poor, but they always say that and do something else.”
In the budget, Gonsalves also announced that the 2 per cent levy on outgoing telephone calls will now apply to incoming calls and data usage.
Friday also criticised this tax, saying that sometimes people don’t have money on their phones and, therefore, can’t make a call but can receive one.
“So, imagine, you can’t make a call and you have to pay 2 per cent to the government to receive,” Friday said, but the government said that is not how it works.
“But the point is, Mr. Speaker, you have a 2 per cent levy that is being introduced now on calls going out and calls coming in. So that is going to affect the use of the cell phone for data and so on,” Friday said, adding that the expression ‘talk is cheap’ is no longer true in St. Vincent.
“I know the young people are going to be very interested in this because they use their phone … more than you and me and so, they will know who imposed this levy on them. And hopefully, when the time comes, they will make their judgment and they will say, ‘You see, Dr. Friday and the NDP, I think they have my interest at heart. I think they will look out for the future of this country, better than what we have here today.”
The increase in the rate of VAT and the expansion of the telecoms levy were among a number of tax increases, including the doubling of departure tax that Gonsalves announced in the EC $976.4 million budget which is being debated.
Meanwhile, St. Lucia just reduced its VAT rate from 15 percent to 12.5 percent.
Although that country also recently introduced a new airport tax, a recently concluded IMF mission to the island opined, “The overall [economic] outlook appears uncertain as positive developments in tourism … may be stifled by the impact of the new airport tax,” a warning to SVG about the impact of the just announced doubling of our departure tax.
St. Lucia just reduced its VAT and Antigua just abolished its personal income tax because as their prime minister said, more than EC$30 million will be back in the pockets of the people (to spend).
In case: http://www.jamaicaobserver.com/news/Antigua-abolishes-personal-income-tax_49425