CASTRIES, St. Lucia, CMC- The St. Lucia government has defended its decision to implement a 2.5 percent levy for health and citizen security that goes into effect on Saturday, even as the Opposition Leader, Allen Chastanet, maintained that it would inevitably cause an increase in the cost of living and doing business in St. Lucia.
Chastanet had written to Prime Minister Phillip J Pierre earlier this week on the issue, saying that implementing the new tax measure “will negatively impact already reduced household income and the country’s global competitiveness.”
In his June 28 letter, Chastanet wrote that as a former finance minister, he felt it “incumbent upon me to warn you of the hazards our country will face as a direct result of the proposed 2.5 percent levy.
“While there are many macroeconomic indicators that show we have made significant strides since the devastation wreaked upon our economy by COVID-19, our current tax revenue has exceeded pre-COVID levels, our GDP (gross domestic product) is only slightly below the high of 2018, and our debt to GDP, as expected, has leveled off at 69 percent,” he added.
But in a statement issued here, Prime Minister Pierre, in acknowledging receipt of the “Open Letter,” said he would, at an appropriate time, “address in full, the contents of this missive” by Chastanet.
But he said that sustaining growth requires prudent fiscal management and diversified revenue sources and that introducing the levy” is one measure that aims to support our economy and provide necessary funding for essential services, namely health and security.
“We once again take this opportunity to state that the 2.5 percent health and security levy will not be on food items, medication, medical equipment, security equipment, and selected building material. Therefore, we do not expect an increase in the price of these items at their point of purchase locally unless prices increase overseas.”
The statement said all items which traditionally did not attract taxes would continue in this regard and “ therefore, the levy will not affect the price of petroleum products, zero-rated or (value added tax)VAT-exempt products, utilities, or tourism products. This government has further expanded the zero-rated or VAT-exempt basket of goods.
“Additionally, VAT will be removed on the following building supplies for two years: plywood, lumber, steel, cement, and galvanize. The public has received this strategic policy well by the government and will drive demand in the construction industry”.
The government said that this new economic activity would be supported by the construction of four hotels accounting for the investment of EC$ 341.6 million (One EC dollar=US$0.37 cents).
“The health and security levy is necessary to ensure that the burden of economic recovery is shared equitably among all stakeholders. It is not a standalone solution to addressing the burdensome debt that this administration now has to honor, but part of a comprehensive approach to strengthen our economy and improve the lives of our citizens.
“The government will continue to roll out its Universal Health Care program and improve the quality of health services at our institutions. The police will continue to benefit from the reinstatement of the Training Vote, equipment, and vehicles to assist in citizen security.”
The government said it remains committed to prudent fiscal management, sustainable growth, and the well-being of all citizens, adding, “We welcome constructive input and collaboration from the Opposition to ensure the best outcomes for our country.”
and then 