The government has removed a further eight items from the list on which VAT is levied.
Prime Minister Ralph made the announcement during his Independence Address on Monday, saying that they will take effect in November.
The announcement comes even as the opposition New Democratic Party had announced since 2020 that it will reduce VAT from 16 to 13%, adding on Oct. 1, 2025, that it will do so within 60 days of coming to office.
The prime minister said that the consumption tax will be removed on the items effective Nov. 3.
The items are chicken parts, processed cheddar cheese, canned tuna, canned sardines, chicken sausages of all types, cereals, lentils and categories of health drinks like Ensure and Suppligen.
“In other words, these items will join several other food items on which no VAT is currently imposed,” the prime minister said.
“For example, no VAT is currently being paid on chicken and turkey wings, back and neck and on several other food items. In some cases, VAT is exempted.”
The prime minister, however, said he has been looking at the list of foods that people consume.
“And there are some which people use a lot. For example, not just chicken and turkey wings back and neck, but a lot more people are buying other chicken parts, such as thighs, leg quarters and so forth,” he said.
He said that removing VAT on those items will cost the Treasury about EC$8 million annually.
“… but because of the continued expected economic growth in the country, it will cushion. So, we would lose that on the swings, but because of the growth, we will be able to collect on other things, not just in relation to taxes at the port, other sets of different taxes,” the prime minister said.
“You see, you have to think about this thing very carefully when you’re addressing this matter. This surgical approach, rather than a general swinging cutlass or axe approach, will better serve the consumer and the country.”
He said the selected items make the removal of VAT on them easier for the Ministry of Trade to monitor than a general removal or a cut across the hundreds of commodities and services.
“If you cut the VAT by a percentage across all the commodities and services, you are not going to be able to monitor them,” Gonsalves said.
“Everywhere in the world where that has happened, the supermarket and the merchants pocket the money, so you don’t get any relief. But by targeting it to particular items which you consume significantly, we’ll be able to better monitor it so that you can get the benefit, and the country will get the benefit.”
He said that those who want a generalised sweeping removal of VAT by one-fifth “have absolutely no responsibility for governance.
“If you do that in the way some people want it, it will cost $60 million a year. And if you take $60 million out of the revenue from one source, you will have to put taxes on other things, or you will have to cut spending on some things which are necessary.”
Gonsalves said the people of St. Vincent and the Grenadines can always rely on “experienced, knowledgeable hands, to do things sensibly and responsibly for the people’s benefit.
“Those who clamour for a reduction of VAT on domestic electricity consumption appear to be ignorant of the fact that nearly 90% of the domestic consumers do not pay VAT on electricity because their consumption does not reach over the 250 units monthly, the level at which VAT is attracted,” he said.
He said that overwhelmingly, it is well-to-do people who consume more than 250 units of electricity per month.
How long after election will it be reapplied I wonder
He must be running scared because this is panic action pre election bribery.
…and how much more items it would go on God forbid he wins?
Gone ah the days of empty promises! WE JUST WANT YOU OUT!!!!
Comrade stop play politics, in most countries of the world , basic groceries are vat free or exempted from taxes. Some countries call it Vat other Good and services tax as in New Zealand. It is the same kettle of fish regardless to what you call it. There should he no application of vat on basic groceries.