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Budget 2024
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By Unity Labour Party

Issue

Budget 2024 presented to Parliament on Jan. 8, 2024 by Minister of Finance Camillo Gonsalves contained tax giveaways to Vincentians which are far more in value than the fee rises for certain services provided by the government.

As a result of the Budget, Vincentians and residents in St. Vincent and the Grenadines have more money in their pockets than before the Budget.

Further, wage and salary increase bolster the material well-being of the people. So, too are the jobs, including quality jobs, created because of the Budget.

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Moreover, the reforms announced for the National Insurances Services will put the NIS further on a sustainable footing for at least another 36 years.

These are the unvarnished facts. Let us go to the details.

Reduction in personal income tax

Budget 2024 makes wages/salaries for everyone below EC$25,000 per year, or EC$2,083 per month tax free. In 2001 when the ULP came to office only the first EC$12,000 per year was free of income tax. In stages over the last 23 years, the ULP government has more than doubled earnings which are tax-free. Only last year, 2023, our government increased the tax-free income from EC$20,000 to EC$22,000 per year; now, the tax-free income goes up to $25,000 in Budget 2024.

This free-up of another EC$3,000 in annual income from income taxes costs the Treasury a whopping EC$6.6 million annually. For every EC$1,000 freed-up from income taxes costs the Treasury $2.2 million per year. Thus from 2023 to 2024, the freeing up of $5,000 from income taxes means a loss to the Treasury of EC$11 million per year

Other tax/fee reductions in Budget 2024

The other tax/fee reductions for the people in Budget 2024 are as follows:

  • 50% reduction on new tyres from Jan. 1to June 30, 2024. A review will be done thereafter. This will save someone with an SUV some EC$700 or thereabouts.
  • The duty-free concession on cement will continue for another year until Dec. 31, 2024; a further review will be done then.
  • The VAT-free concession for domestic consumers of electricity from VINLEC on the first 250 units (kilowatt hours) consumed will continue until Dec. 31, 2024; a further review will be done then. This measure means that over 80% of domestic consumers pay no VAT on electricity. Before this concession in 2021, only the first 150 units consumed were duty-free.
  • 50% reduction on principal and interest of monies borrowed by farmers from the state-owned Farmers’ Support Company (FSC). This reduction will cost $2.75 million.
  • The interest rate on student loans for Economically Disadvantaged Students from the state-owned Student Loan Company is further reduced from 6& per year to 4.5%.
  • On March 1, 2024, waivers/rebates on arrears owed to the hospital services and Town Board respectively, will be announced. These waivers/rebates will bring significant relief to persons who used the in-patient services at the hospitals and the vendors who rent to the Town Board. At the Milton Cato Memorial Hospital alone, in-patient arrears for the years 2016-2023 amount to over EC$12 million. It is likely that the waivers/rebates will be between 50% and 100%. The waivers/rebates at the MCMH will amount to at least EC$6 million. The data from Town Board are still to be verified, but the loss to the Treasury of waivers/rebates will be substantial.

Together the income tax reduction and these other tax or fee reductions will cost in excess of $18 million.

Increase of fees/charges for services provided

There are increases for fees/charges in Budget 2024 for the following:

  • Drivers’ licence fees and related fees were last increased in 2016. The cost to government for delivering these services have gone up sharply. The increases are modest on a pre-existing small base. In total, government will collect EC$2 million more on these increases.
  • Motor vehicle licenses were also last reviewed in 2016. The increases are very modest for the bulk of the vehicles, and will yield additional revenue of just about EC$4 million. The increases on the heavy trucks, over 8 tons, which mash up the roads are much higher. Surely, no one can reasonably disagree with this. Actually, the increase for a big SUV is only EC$95 per year, less than EC$8 per month. For a small car, the increase is EC$40 per year.
  • Electrical Inspectorate fees were last increased 28 years ago in 1995. Modest increases in 2024 will provide additional revenue of 250 thousand dollars.
  • The Airport Service Charge is being increased from US$40 to US$55. This is payable on all airline tickets for travel in and out of St. Vincent and the Grenadines. These charges go directly to operate the Argyle International Airport which has over 300 employees. The additional revenue is estimated at EC$6.6 million. This increase takes effect on May1, 2024. Even with this increase, this Service Charge is still among the lowest in the Caribbean. Tourists are a huge group who will pay this increase, although Vincentian travellers will also pay.

In total, therefore, the increases in fees and charges will amount to EC$12.25 million annually. This is much less than the tax/fee giveaways.

It should be pointed that even with EC$6 million increase in drivers’ and motor vehicles’ fees, the total collected for these road-related fees in 2024 will amount to less than EC$30 million. However, it costs more than EC$3 million to reconstruct one mile of road. In other words, the total of all these fees can reconstruct less than 10 miles of road! But there are almost 90 miles of highways (Windward, Leeward, and Vigie), 400 miles of secondary or village roads, and 400 miles of feeder rods. In Budget 2024, the sum of over EC$100 million is allocated to roads (capital projects and maintenance through BRAGSA). Thus, the government has to borrow money to finance the rest of the reconstruction and repairs/maintenance much beyond what is collected in road-related fees. Surely, the government has been reasonable, and more than fair, in this regard.

Policies in budget to lift up the workers further

In Budget 2024, there are bundles of policies galore to lift the working people and SVG higher. Among those which directly lift the workers and the nation are the following:

  1. An increase in the minimum wages from between 20% and over 75%. As of March 1, 2024, no worker will be paid, by law, less than the minimum of EC$1,000 per month or EC$50 daily. Part-time workers (less than 3 hours per day) will be paid no less than EC$7 per hour. Under the ULP government this is the fourth increase in minimum wage; the last time was in 2017. Under the NDP rule of 17 years, minimum wages were increased once! (The minimum wages for call-centre workers will increase by 15% because that minimum was set in 2020 rather than 2017 for other workers).

Categories of workers such as shop assistants, domestic workers, agricultural workers, cooks, cleaners, secretaries/typists will get a big boost in minimum wages.

  • Paid minimum maternity leave will increase from eight weeks to ten weeks (35% from the employer and 65% from NIS). In the public service and big private sector companies there is mainly 12 weeks paid maternity leave. When the ULP came to office the paid minimum maternity leave for most categories of workers was only four weeks.
  • Apprentices, including YES volunteers, will receive no less than EC$800 per month or EC$40 per day. YES volunteers’ stipend will move from EC$650 to EC$800 monthly. The stipends for SET workers will increase correspondingly.
  • Nurses, nursing assistants, and nursing aides will receive as of Jan. 1, 2024, for 6 months, in the first instance, a 5% supplementary income, tax-free. The intention is to upgrade these categories of staff further after June 30, 2024. The 6-month supplementary income will cost the Treasury EC$1 million.
  • All public servants, nurses, doctors, teachers, police officers, etc. will receive a 2% salary increase from Jan. 1, 2024. This is on top of the 2.5% increase last year and the 2.5% earmarked for 2025. It is to be noted further, that some one half of all public servants (those not at the top of their scales) receive a 2% built-in increment annually.

Conclusion

Directly, the working people are far better off because of Budget 2024. Indirectly through the various capital and recurrent programmes, they are also way better off than before. This is a Labour Government.

In all this remember the prayer of the Breton fisherman:

Look after me, dear Lord;

My boat is so small,

And your ocean is so vast.

St. Vincent and the Grenadines is a small country with limited resources in a huge challenging world; yet we have a huge level of human development as assessed by the United Nations Development Programme. We are on the right track with Labour!

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