The fiscal policies of the government of St. Vincent and the Grenadines (SVG) have made worse the economic impact of the COVID-19 pandemic, says Opposition Leader Godwin Friday.
“I’ve heard people talk about supply chain pressures and so forth. But if you know this, then you don’t make it worse and exacerbate it,” he said in response to comments by Finance Minister Camillo Gonsalves that Vincentians will see their salaries buying less because of COVID-fuelled inflation.
“His government, by its own policies of taxing people at the port, by increasing the Customs Service Charge from five to 6%, with all the ripple effects of that going through to VAT and so forth, and increasing that some time ago, all of these things are going to make it difficult for people to make ends meet, when they are compounded by exogenous shocks created by the COVID crisis or any other situation, whether it’s oil or so forth,” the opposition leader said on Monday on his weekly radio programme on NICE Radio.
“The point is that this government increased taxes on people during the COVID-19 crisis. So how can you now talk about having inflationary pressures, and people are going to see their money buying less, because the goods have gone up in large measure; well, because the customs service charge has increased…”
Friday said that the opposition had warned that this would have been the effect of the one percentage point increase in the tax.
“And we predicted this; we told them that — that you can’t be taxing people now, in this crisis. Government has need for money, but so, too, do ordinary Vincentians and governments are there to serve people; not to serve itself, its own needs. When people catching hell, you try and extend a hand, reduce costs, revise things — don’t collect what you need to, because you have to make sure that people have money in their hands to do it, because government not giving them .”
The opposition leader said that the relief package that Parliament approved in April 2020 is “basically all that was done for persons who are directly affected”.
He said that instead of increasing the customs service charge, the government should “let people keep what little money they can earn or they have in their pocket, or people sent to them from abroad and stretch it to go further.
“Government will still eventually get it through VAT and so forth — get their share. But they go and increase the customs service charge.
“And then have gall to come and say that there’s going to be inflationary pressures on people because of COVID. It’s also created by the bad policies of this government, which we had told them about.
“We had told them about that; that you can’t be putting it at the point of entry where it affects everything.”
He said that the effect of the increased customs service charge is compounded by the fact that VAT is then added.
“And so doing all the arithmetic and saying, ‘Oh, this is how much it’s going to affect’. There is the old adage that there’s a straw that breaks the camel’s back,” Friday said.
The opposition leader said people in SVG are poorer now than in 2008.
He cited data from a poverty assessment report last year. However, the government has said that the study, which should have been completed in 2018, is incomplete.
“That is their own study that they have refused to complete and make public so that people understand better our circumstances and can make decisions and choices and could understand what has happened to St. Vincent and Grenadines over the past decade or so.
“When you have that situation, and then you go and increase the taxes on people, of course, they’re going to have less money; they’re going to buy less goods. Whether COVID or not, they are going to have less in their pocket because government has taken more and more from them. And that is where we are,” the opposition leader said.
“And so it’s kind of precious that the finance minister could talk about inflationary pressures and not recognise that his policies as well are putting pressure on people, and taking money from their pockets or raising prices so that they can buy less through their own policies.
“That is something that he needs to reflect on. They should be giving breaks to people, instead of putting their hand into people’s pockets again through the customs service charge.”
Friday said that the opposition had raised this issue during the Budget Debate and subsequently, having understood from speaking to merchants and people about the real implications of the increased tax.
“So it’s not credible the way in which that statement is made, because it just simply ignores the fact that their policies as well have contributed to whatever he says can happen to people in their purchasing power,” he said.