ST. LUCIA-Manufacturers want an urgent meeting with PM to discuss tax.

CASTRIES, St. Lucia, CMC – The St. Lucia Manufacturers Association (SMA) has written to Prime Minister Phillip J Pierre, seeking an “urgent” meeting with him to discuss the impact of a 2.5 percent levy for health and citizen security that went into effect last month.

In its July 28 letter, the SMA said that despite pronouncements by Prime Minister Pierre in Parliament that the manufacturing sector would not be affected by the following tax, “we were surprised to note that the manufacturing sector was not exempted from the levy.

“Although food is exempted from the levy, at the port, all packaging and raw materials imports will attract this levy as per a meeting held between Inland Revenue (IRD) and manufacturers on Wednesday, July 26, 2023.

“This change in position makes it extremely challenging for our members to rebound from the COVID-19 pandemic. This would also mean an increase to our product price to consumers as it would be compounded on the already established VAT (Value added tax), making the increase more than a 2.5 percent impact,” the SMA wrote.

It said that the timing between publication and implementation of the Act is also a challenge for its members, “as they would need to adjust their systems and the IRD would need to do some training with our members. We were also advised that a new form will be issued to report the levy, but this has not been received”.

The manufacturers said that it has been reaching out to the Ministry of Commerce from the time of the announcement of the new levy with little success and is now left “with no option but to address our concerns to you directly since we also noticed that you have been meeting with some of the private sector organizations.

“We are therefore seeking an urgent audience to meet with you and your team to discuss the implications this can have on our production. We look forward to a favorable response,” the SMA wrote.

Last month, the government defended its decision to implement the 2.5 percent levy for health and citizen security 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 Pierre that implementing the new tax measure “will negatively impact already reduced household income and the country’s global competitiveness.”

“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, Prime Minister Pierre said that sustaining growth requires prudent fiscal management and diversified revenue sources and that introducing the levy” is one such 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”.