Tax expert says VAT methodology all wrong!

Government is placing the cart before the horse in the implementation of VAT, says Jeffery Stewart. The tax expert appeared on Wednesday’s edition of “The Hot Button Issue” with Timothy Poleon.
Stewart gave a background of the VAT ideology which sought to remove the notion that it was a government idea but rather stems way back to when St Lucia joined the World Trade Organization (WTO).
“We joined the World Trade Organization many years ago; actually, from the time of Sir John Compton and as a member of the WTO, you are not expected to have barriers to trade at your ports. This is how we have always done it, it has been our biggest revenue earner for years. If those Levies and Taxes have got to go, then it means that at some point you are going to be expected to come up with other Tax Legislation that is going to replace the revenues you got from those sources. We set up a commission to look at it, to see what we are going to do; it was headed by Sir Alister McIntyre and great members on it, Sir Dwight Venor and a number of other technical people. They suggested to the government of St Lucia as they did to the other Caribbean islands that to replace the revenues you are going to lose at the port then implement VAT,” said Stewart.
He said St Lucia has no choice but to implement VAT as member of the WTO which gave a mandate to remove Consumption Taxes, Environmental Levies and other Taxes that are present at the port to allow for free trading among member territories.
He believes that in the implementation of VAT the methodology is all wrong.
“Basically what worries me with this VAT and why I have decided to come out to speak about it is to ensure it is implemented efficiently. VAT is being promoted as a Tax that is going to replace Consumption Tax, Environmental Levy and so on, but what we have in front of us is a situation where the government has said that they are not going to remove those taxes immediately, they are going to gradually try to get rid of them while the VAT collection is taking a bite and becoming strong and dependable.
“I am a little disappointed in the approach to VAT; I don’t think that VAT is something that could be approach by saying we are going to implement it on the 1st of September or we are going to do it in April as the last Government did.
“I personally believe that the present Government is putting the cart before the horse; to tell me you are going to implement it in September is not the way to go and that’s why I am getting involved.
“The starting point for me is the finalization of the legislation; people have to know what it is that they are going to pay, we don’t know specifically what the rates are, we don’t know what’s going to be free or exempt from VAT, we don’t know a lot of things. And a lot of what we know are things that I want to pick up and argue with the government over,” he said.
Stewart said that there are things in the legislation that he would not accept in its current form. Such things he pointed out are: “The first thing that concerns me of VAT and I am looking at my business as an exampl,  when VAT is implemented, I’ve got to charge a VAT of 15 percent on all of my invoices. So a man comes to me and I charge him $1000 for whatever I did for him, so that means I have to add a 15 percent VAT. I then would have to send him a bill for $1000 for me plus $150 VAT–his bill is $1150. I billed him in January; that man pays me in February or in March or perhaps, the man may take 3 months to pay me.                     Government states in the Bill as it presently stands that at the end of the first month when I billed that man, whether he pays me or not, I must send them $150 for VAT. That is ridiculous!”
Stewart says this is one issue he will fight against as the Government seeks to implement VAT. He further stated that the financial community is not in a very lucrative financial position to tolerate these terms and conditions where VAT is concerned. He went on to express his desire to see that VAT is implemented properly “so that it causes least hardship as is possible.”
The 40-year-experienced Tax man said the implementation approach needs to be done methodically and in a spirit of compromise.
“We as a Nation must stand up and try to support the Government and the Government must do what it can as best as it possibly can.”
Meanwhile, the VAT Project Office states that it is in full preparation mode for the implementation of VAT come September 1st. On Thursday April 19, the Project Coordinator and other members of the Office met with representatives of the Ministry of Commerce, to discuss support which Government can facilitate for the Small and Micro Business Sector through the Small Enterprise Development Unit (SEDU). The Coordinator described the dialogue as a brainstorming session with a focus on capacity building for micros and the informal business sector that has value beyond VAT.
“When you think of micro business in relation to how VAT works to streamline and simplify the collection of tax, any facilitation designed to bring them on to the system must also strengthen their own internal accounting methods and record keeping.             “Our consideration is to identify what types and levels of facilitation Government can reasonably provide that makes the transition as seamless for Micro-businesses and with as little impact on their pockets as possible,” said Barbara Sonson, Coordinator at
SEDU.
This past week, the Office also continued dialogue with the Executive of the Saint Lucia Hotel and Tourism Association, to assess the sector’s state of readiness for the implementation of the new taxation regime, as well as other concerns.
Sonson also indicated that as soon as these arrangements are finalized, they will be communicated through mass media,
Social Media and a new VAT website, which is expected to be unveiled sometime next week.

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