‘Basket of Goods’ to be protected

St Lucians will begin paying a value-added tax (VAT) from September 1, 2012. So said the prime minister in a press conference held in his office on Thursday this week.
According to Dr Anthony, the government will fulfill undertakings given to international institutions by the former government that VAT would be introduced during this financial year.
Last year both the then Prime Minister Stephenson King and the Dr Anthony had announced the implementation of VAT this year regardless of which party comes into office.                 Stephenson King had announced implementation as early as April of this year but that date was changed by the new administration to allow enough time to finalize the system and for the public to make necessary adjustments.
Anthony said his government remains committed to promises made during their election campaign.
“Consistent with its manifesto promises the government will one, maintain a basket of goods that will be zero rated, meaning that no VAT would be imposed on these goods; and two, delay the introduction of VAT on the payment of bills for electricity and water until the government is satisfied that the public is reasonably protected from arbitrary increases by the companies that provide these services.”
The size of the tax has not been disclosed, but the PM says ongoing discussions will conclude shortly and determine the tax rate to be paid on goods. He added that more details will be made available during the budget address soon.
But according to Cabinet Conclusion No 1074 of the previous administration in November 2007, Cabinet approved the establishment of the Value Added Tax Implementation Project Office with the mandate to prepare St Lucia for the implementation of a VAT system in the most effective manner.
Some of the policies included; a standard VAT rate of 15 percent and a rate of zero percent for goods and services in the zero-rated list. These goods and services include goods produced for exports and agricultural inputs. A VAT registration threshold for companies transacting business to the value of EC$120,000.00 per annum. Exemption from the payment of VAT on a list of supplies including basic food items, financial services, medical services, prescription drugs or medicines, education services, day care services and local transportation with a driver, among others.
Many stakeholders will be listening attentively to the PM’s address to see if any of these policies will be reiterated in the budget.
In 2003, the Monetary Council of the Eastern Caribbean Central Bank (ECCB), which includes St Lucia, took the decision to implement the VAT throughout the sub-region as part of a wider regional tax-reform initiative.
The decision was based on the recommendations of an ECCB-appointed Tax Reform Commission.
This policy was reiterated in the 2007/08 budget address by the former Prime Minister and Minister for Finance the Sir John Compton who assured St Lucians that the VAT will not be an additional tax but will replace a number of other indirect taxes.
At his press conference, Dr Anthony further announced that the VAT Implementation Unit is currently finalizing arrangements for the introduction of VAT and adds: “While a considerable amount of work has been undertaken by the VAT Implementation Unit in engaging various stakeholders in consultations and educating the general public on the characteristics of a VAT, the work of the Unit will intensify in the coming weeks with a view to ensuring that the business community and the public in general are provided with all relevant information and are adequately prepared for the change in the tax regime.  The Government expects to complete consultations with key stakeholders in the weeks ahead.”
In a statement released last year, Dr Anthony noted: “There is a general consensus and understanding that it is incumbent,
upon any administration charged with the fiscal management of this country, to proceed with the implementation of VAT as part of wider tax reform.”
Saint Lucia remains the only country in the Eastern Caribbean which has not introduced the VAT.