House Amends VAT to Benefit Local Manufacturers!

The manufacturing sector especially has long prayed for an amendment to Schedule 1 of the VAT Act; in particular, the absence of a tax exemption for locally produced “educational supplies”. As Prime Minister Allen Chastanet explained in Parliament on Tuesday, “educational supplies” under the Value Added Tax Act, Cap 15.42 (VAT Act) include “newspapers, trade catalogues and advertising matter, magazines and books and patterns and samples with no commercial value.” 

Previous to this week’s amendment: “When those items are produced and printed locally for third party, the production or printing thereof is treated as a service and subjected to the standard rate of VAT.” In consequence, “The service of printing such as books, magazines, leaflets and invitations in Saint Lucia was rendered more expensive than the cost of importing a similar printing service, and rendered local suppliers of that service uncompetitive.”

With the amendment, these items will be “treated as exempt supplies as under the Second Schedule of the VAT Act.” 

Following the prime minister’s tabling of the VAT amendment motion, a dapper opposition leader Philip J. Pierre was first on his feet. “Mr. Speaker, I rise to support the VAT exemption for barrels, which was an initiative of the Saint Lucia Labour Party, and surprisingly the government has followed it, unlike many other initiatives.” Pierre’s olive branch turned out to be even shorter than his debate contribution, as he threw in this tiny caveat in relation to “this SLP barrel initiative”.  

He said he “did not expect to be here debating VAT. I thought VAT would have been eliminated. I really thought that there would be no VAT. Five to stay alive, the reduction of VAT and its elimination. But, as many things, this too shall pass.”

What looked like a smirk abruptly appeared. “I also understand the reason, the thinking, behind the first amendment to the VAT tax, but that will remain for another show.”

Castries South MP and recently elected SLP deputy leader Ernest Hilaire seemed to pick up his leader’s cue: “Mr. Speaker, it looks like the kwéyòl weekend had a devastating effect on some people in this House.” As for the tabled motion: “I support it. We make no bones about it. We support it. The leader of the opposition said he supported it. But when are we going to get the elimination of VAT?”

If from there he seemed to take off on his own frolic, no matter. “The fundamental issue is that the members on the other side promised to remove VAT,” he went on. “Three and a half years later, we’re coming to the House to have an amendment for educational supplies.” He cited a remark by the MP for Castries Southeast who, he said, “even spoke about one particular individual benefitting. I don’t even know what he means but maybe there is a story behind this VAT amendment that we’re not even aware of. And I would love to know, Mr. Speaker, who that one individual is, who’ll be the beneficiary of it. How? Who is it? Am I bringing the truth to light, Mr. Speaker? I don’t know. I don’t know.”

In trying to make “the fundamental issue” of Tuesday’s proceedings the UWP’s election promise to eventually remove VAT altogether, there was one glaring omission by Pierre, Hilaire & Company. 

Castries Southeast MP Guy Joseph, took care of that: “I rise in support of the motion put forth by the Minister of Finance, the member for Micoud South, to create a more level playing field for our manufacturers. The issue concerns manufacturing and printing, and I know why the member for Castries East was very brief. I know why he would not tackle this. On this occasion I could read the smiles, Mr. Speaker. There were some smiles on the other side. Because you see, Mr. Speaker, when the Labour Party was in government, each time they brought a motion to this House, it was geared toward particular individuals. But today’s decision is going to benefit the manufacturing sector in Saint Lucia. Not just one individual.”

“You’re exposing yourself so easily!” MP Hilaire hollered defensively from his seat. But Joseph was about to lower his boom: “Listen, Mr. Speaker, that’s the party which speaks about friends, family and foreigners. But here’s what they did. They introduced VAT in a manner that gave the foreign entities an advantage over the local manufacturers. That is the wrong we’re finally putting right today!”