The Unity Labour Party government has rejected the proposals by Opposition Leader Godwin Friday to help Vincentians cope with the rising cost of living.
“I tell you children and fools must not play with edge tools. You hear me? It’s a pity that I have to take my time to read this kind of garbage,” Prime Minister Ralph Gonsalves said of Friday’s speech.
“I tell you my opinion of Friday as somebody who understands fiscal matters is a number approaching zero. That’s what I think about him on that. At least he got his Canadian passport in he front pocket. He could run off anytime and go — proudly in his front pocket. Me, I gotta stay here,” he told a press conference in Kingstown on Aug. 11.
In a national address on Aug. 11, the opposition leader outlined his New Democratic Party’s suggestion for helping the country to cope with the increasing prices. He suggested reducing VAT from 16% to 13%, rescinding the increase in the Customs Service Charge, and capping the fuel surcharge on electricity.
Gonsalves said that he wanted to meet Friday’s suggestions “head on” and said that they would cost the government in excess of EC$120 million in revenue, and affect its ability to pay salaries.
Responding to the call that the government repair houses damaged by the volcanic eruption, Gonsalves said his government is building the houses and repairing roofs.
He said that the NDP did not build a single house when it was in office for 16.5 years ended March 2001.
“What I want to deal with here is Friday’s proposals of folly,” he said, adding that during the campaign for the November 2020 general elections, the NDP had said that it would reduce VAT from 16% to 8%.
He said that for domestic VAT, this translates to the loss of about EC$12 million for every percentage point by which VAT is reduced.
“If you want to reduce it by half, which is 8%, that is $96 million. Well, they saw the absurdity of that. So even now the situation is challenging with COVID and volcano, they dropped reducing it by half — just by three percentage points, from 16 to 13,” Gonsalves said.
“But that’s $36 million on an annualised basis.”
The prime minister said that each percentage point of the Customs Service Charge generates EC$8 million and that Friday’s proposal would amount to a loss of EC$16 million in revenue.
The prime minister noted that Friday has called on the government to increase support for lower income families by expanding existing support programmes.
“Well, he hasn’t mentioned that we are the only country, the only government that ever borrowed money, $13 million, from the World Bank and give people a [bank] cards. We widen the social safety net in every respect.”
Regarding Friday’s call that the government ensures that support is distributed based on need and not political favour, Gonsalves said:
“Well, we’re not the ones responsible for distributing this stuff. That is public servants. People call me and so on. So cut the crap out nuh, Friday; cut the crap out! Cut it out! Just stop the foolishness! Cut the crap out!”
Gonsalves noted that Friday also called for import duty concessions for the public transport industry.
He said if the duty is halved, the government would lose around EC$30 million.
The prime minister said that the government gives 75% duty free concessions for minibus operators who transport schoolchildren.
He said it was he, when he was an opposition parliamentarian, who shamed the government into doing this.
“I have to borrow money to fix the roads because what we collect for vehicles is not enough to fix the roads. But you still want to give more. What is the matter with these people? You think Vincentians are ignorant?”
Regarding the proposal that the government caps the fuel surcharge on electricity, the prime minister said that Friday did not give a figure.
However, the opposition leader noted that it was 72 cents in July 2022, up from 28 cents in March 2021.
“So presumably he wants the cap to be at 28 — 44 cents. Well, for every percentage point of the fuel surcharge on a monthly basis is $65,000. You multiply that by 44 cents, you get $2.86 million monthly that’s $34.3 million on an annualised basis,” Gonsalves said.
“So before he even reaches there, he is close to $100 million in giveaways and you put on this number again. So 100 and something million dollars might reach beyond $120 million when you top up his giveaways.”
He said that that the government has to find EC$30 million monthly to pay public sector workers.
“So it’s between three to four months salary Friday wants to give away. He ain’t tell you how you got to make it up. So you see teachers, civil servants, police, nurses, doctors, if the NDP in government at the end every month only some of you going get paid,” Gonsalves said.
“They have any understanding what government? Is they want to have chaos in the country, where, by their fiscal measures, civil servants will not be able to get their salaries?” the prime minister said.