PM says opposition will call Budget 2025 ‘bogus’

Prime Minister Ralph Gonsalves on Wednesday urged the public to listen to the debate on the 2025 Budget, which begins on Monday, to hear what he said are the differences that will emerge between the government and the opposition.

“You will hear them say, ‘Ralph’s government has taxed people … and they will remove the taxes,” Gonsalves said on NBC Radio.

The opposition New Democratic Party (NDP) has said that if elected to office, it would reduce VAT from 16 to 13%.

However, Gonsalves and his Unity Labour Party (ULP) administration have rubbished the idea with him saying on Wednesday that his government has reduced the top rate of income tax from 40 to 28%.

He said the “sweet spot” might be around 25% or less.

“And we have brought the threshold below which you do not pay any taxes, from $12,000 a year to $25,000 a year,” he said, noting that this applies to everybody.

“The Treasury has lost, on the face of it, significant money by those two tax measures,” the prime minister said, adding that while his government introduced VAT, there is a wide range of items that are zero-rated or exempt under the VAT regime.

“For instance, a lot of basic foods carry no VAT. Medicines carry no VAT,” Gonsalves said.

He also noted that VAT on electricity bills applies only to use of over 250 units (kilowatt-hours) a month.

“Less than 15% of the population pay VAT on electricity,” the prime minister said, adding that in the rest of the Caribbean, VAT is either taxed fully or applies to consumption of over 100 kilowatt-hours per month.  

Gonsalves, who has been in office since 2001, said that at the end of 2000, nominal GDP was $780 million at market prices.

“As of Sept. 30, last year, it’s over 3 billion, nearly 3.1 billion, nearly four times what it was at the end of 2000,” he said.

The prime minister said the rate of inflation was between 50%, but even if the figure were adjusted for inflation at the rate of 100%, the nominal GDP would be around EC$1.7 billion.

He said this year, his government plans to collect $142 million in VAT at the Customs Department and EC$159 million in internal VAT is EC$159.

“… where in finding nearly $60 million from if you give up nearly 20%?” Gonsalves said, adding that people would not get Public Assistance nor public servants their salaries if the government reduced VAT.

“… Reducing the VAT is going to put money in the hands of the supermarket owners and the people who sell cloth in Middle Street,” the prime minister said.

“It ain’t going to change anything with the prices, because the inflation in this country is imported.”

Gonsalves said he is not a magician.

“Ralph is sensible and do the thing with order and discipline and good sense,” he siad.  

“… listen carefully to the budget. They would say the budget is bogus. Well, they have been saying that for all years. Remember, you know, they say I couldn’t last a year, and after I present the first budget thing going fall apart. Remember, there was a thing called One Term Papa? Well, I’m the five-star general. I soon to become the six-star general,” Gonsalves said.