Leader of the Opposition Godwin Friday says the government should cut the VAT rate by at least one half to help Vincentians cope with the tough economic times.
Friday told his New Democratic Party’s (NDP) 42nd convention, on Sunday, that the tax burden grows “as the cost for import raises and supply chain issues and other factors cause the burden on ordinary people to get heavier”.
He said for the three years after the 2015 general elections, the VAT was increased by different means.
“It goes up, but it does not come down. I believe it is time for the VAT to come down.”
The opposition leader pointed out that during the campaign for the November 2020 general elections, the NDP had promised to reduce VAT from 16% to 13% if it was elected to office.
“Because we believe it is necessary to reduce the VAT to reduce the impact of the rising cost of living on the people,” he said, adding that the situation has worsened since the last poll.
“The government says that it did not increase taxes in the last budget. I had told them that they should not because that will just be rubbing salt in the wound that the people are feeling.”
In January, Parliament approved an EC$1.33 billion fiscal package for 2022.
“But they did not provide any tax relief as was done, for example, in Grenada. So all they tell you, they pat theyself on the back and say, ‘Well, I’m not taking any money out your pocket this year. So consider yourself lucky.’ But no tax relief was given to the people.”
Friday said that at the same time, employers say they cannot increase wages.
“So people are squeezed by stagnant wages on one side and rising prices on the other. Given the pressure that people are feeling, I think the government has to be bold, they have to do more than what we advocated before; they have to consider cutting the VAT by more than 3%.
“They need to consider reducing it by at least half so that people can get some relief now and then go forward and see what we do when the economy starts to grow under an NDP government.”
The opposition leader said that given the pressure that people are feeling, relief must also come against the rising gas prices.
“Telling people that frequent increases in gas prices over the year is a result of world conditions is no relief to fisher folk whose cost has risen dramatically, but they can’t sell their fish for any more money, because people don’t have money to pay.
“It is no comfort to the taxi and bus operator who must work within fixed prices or price schedules, fare schedules, notwithstanding, if you will, the rising fuel costs. So some relief must be provided to them to buffer the effects of rising gas prices. And, of course, and the effects of COVID,” the opposition leader said.