Gov’t ups Customs charge to fund regional agencies

The government is taking a step back from implementing a slew of revenue-earning measures in light of the impact of the COVID-19 pandemic, Minister of Finance Camillo Gonsalves said in his Budget Address on Monday.

He, however, announced a one-percentage-point increase in the Customs Service Charge, which will go toward funding regional agencies and organisations from which St. Vincent and the Grenadines benefits.

In presenting the EC$1.2 billion fiscal package, Gonsalves said the new measure is expected to raise almost EC$10 million.

“The increase will move the Customs Service Charge from 5% to 6%, a rate that is still among the lowest in the region,” he told lawmakers, who are expected to approve the budget by the end of this week.

“We expect the measure to yield $9.6 million this year which represents less than 1.5% of budgeted revenue,” he said.

“It is precisely the nature of the times and challenges that demand our response today. We simply cannot manage the pandemic and the volcano without properly funded regional institutions.”

Gonsalves said that current challenges — including the coronavirus pandemic, the on-going effusive eruption of La Soufriere volcano and the dengue epidemic — have highlighted “the indispensable role” played by a number of regional organisations in the governance, safety and resilience of SVG.

“Our response to the pandemic to date would have been impossible without the support and technical experience of the Caribbean Public Health Agency (CARPHA), the Pan-American Health Organisation and the Regional Security System (RSS),”

The finance minister further said that the monitoring, analysis and preparation for any eventuality at La Soufriere were made effective through Kingstown’s cooperation with a number of regional organisations.

He listed the Caribbean Disaster Emergency Management Agency (CDEMA), the CARICOM Implementing Agency for Crime and Security (IMPACS), the Caribbean Institute of Meteorology and Hydrology, Caribbean Meteorological Services and the University of the West Indies Seismic Research Centre.

He said that these agencies and more “constitute an extension of local functions of our government, and are inextricable from the work of a modern nation state.

“They are also collective entities, upon which multiple nations in our region depend,” he said.

Gonsalves said that the functions of these essential agencies are “significantly stymied by irregular and insufficient funding”.

He, however, said that his government and those of other Caribbean nations have been “guilty at one time or the other, of racking up arrears to these entities.

“Their own emergency services to us at this time were hampered by various financial challenges,” he said of the agencies.

“This is an unsustainable state of affairs,” Gonsalves said and announced that his government will pass legislation that will guarantee automaticity of financing of certain critical regional entities.

“These entities will be funded by a [one percentage point] increase in the Customs Service Charge, and ring-fenced in much the same way that we set aside monies for our Contingencies Fund,” Gonsalves said.

“While we have been cautious not to impose tax measures at this time, and, indeed, postponed many of the fees and measures passed in last year’s budget, it is precisely the nature of the times and our challenges that demand our decisive response today,” he said.

In mid-January, CDEMA secured funding from the United Kingdom to the tune of 51,000 pounds sterling to cover the cost of a helicopter used in monitoring the volcano.

The EC$1.2 billion budget represents a 2.2% increase over the 2020 approved Budget and is projected to have a current account deficit of EC$51 million, which the minister said is a result of COVID-19-related economic shocks.