Opposition Leader Godwin Friday, on Monday, called on Minister of Finance, Camillo Gonsalves to give an “ironclad commitment” that there will be no new taxes in the 2022 Budget.
He said that the economic situation in St. Vincent and the Grenadines was bad before the coronavirus pandemic, adding that 41 cents from every dollar that the government collected went to servicing the national debt.
“So, before the pandemic, we had these problems so let’s not give the impression that all of a sudden that things have gone south because of the pandemic, because of things that are happening, because of Soufriere and so forth,” Friday said on Monday on NICE Radio.
“The structural problems we had before and they have now been exacerbated and they have now revealed, quite frankly what we have been saying in the past,” he said on his weekly appearance on New Times, his party’s daytime radio programme.
The opposition leader noted that in the midst of the pandemic, Minister of Finance, Camillo Gonsalves, increased the Customs Service Charge, which is expected to generate between EC$8 million and EC$10 million annually for the government.
That amount, the opposition leader said, does not fall out of the sky.
“It comes out of people’s pockets because that is collected when the increased service charge is incorporated into the cost of the goods that people buy in the shops,” Friday said.
“So it’s the ordinary citizens, who, essentially, are paying it. We know that the government finances are squeezed but so, too, are the finances of the ordinary people. They exacerbated the problem as well by the way in which they had been managing the finances of the country over the years and we have complained about this repeatedly.”
The opposition leader noted that at this time of the year, the government is preparing the budget, to be presented towards the end of the year or early in 2022.
The government has increased the service charge at a time when those things should not happen.
“The Minister of Finance must give the people of this country an ironclad commitment that there will be no new taxes in his new budget when that comes to the Parliament…” Friday said.
“There must be a commitment that you cannot take money out of people’s pockets again at this time when they are feeling the pain. If you can’t put money back into people’s pockets, at least leave them with what they have,” Friday said.
The opposition leader further stated:
“And so there must be a commitment by the minister of finance, I am calling on him to give that commitment that there will be no new taxes when the budget comes about; when he prepares the budget for 2022.
“So this is something that we are going to hold the government accountable on and continue to insist that they do not abuse, misuse, disregard the guardrails that have been established over the years to ensure that the economic affairs of the country are managed properly, that the finances of the government of the government are managed properly and these are all in the Constitution; they are in the Finance Administration Act; they are in the audit act.”
‘very, very serious economic problems’
Friday said that there were very serious economic problems in St. Vincent and the Grenadines leading up to the pandemic in 2020.
He said that in 2019 there was a growth rate of about 0.5% and the average was around 1.3% over the course of five years.
“That is no growth in an economy like ours and that is why the poverty rate in our country has been increasing and why the people have been feeling it to the point where they have been complaining about the cost of living.”
The opposition leader said that the minister of finance has warned that Vincentians will see inflationary prices as a result of supply chains disrupted during the pandemic.
“We have heard some of those theories. But the point is that we expect that there may be economic disruptions caused by COVID. That’s happened worldwide but we have to put ourselves in a position to be able to respond, to react to it and not exacerbate it by our own policies here in the country.
“And, certainly, when the government increases the Customs Service Charge at the beginning of this year, in the middle of a global pandemic, you could tell the attitude they had adopted back then, at that point, to put taxes on people at that point, a tax that is at the root of everything that comes into the country. So it will spread to almost every item that is on the shelf and so, would affect everybody. “
Friday said that increasing the customs service charge suggests “a mindset that somehow the pandemic isn’t as serious as it is and that we will be out of this pretty soon.
“But it is not the case. We know the situation with COVID is worse now that it has been. So the government made the situation worse by increasing the customs service charge which then fed into all the goods … that are coming through the port; that is something that is of our own making. Because they said it is only one percentage point but they acknowledge that it will earn the government between 8 and 10 million dollars…”