Philip Pierre’s new 2.5% levy is an economic wildfire destined to engulf the poor and various business sectors!

The recent decision by the government to implement a 2.5% Health and Security levy on goods and services effective from July 1st, 2023 has raised concerns about its potential impact on the poor and various business sectors in Saint Lucia. While some economists consider levies an effective means of generating income for governments, this Levy will negatively impact economic growth and job creation. It is regressive and will disproportionately affect low-income St Lucians. 

Did the government consider alternative options before implementing the 2.5% levy? What specific measures will the government take to assist disadvantaged and marginalized groups impacted by the levy? One of the key concerns is that businesses will pass on the levy to consumers by raising prices on everyday goods and services. There is no doubt that the introduction of the levy is expected to reduce spending, particularly on non-essential items, as people try to offset the increased costs of goods and services. This change in spending behaviour is guaranteed to have a ripple effect on businesses, particularly those that rely on discretionary spending, resulting in a decline in sales and revenue.

The Prime Minister provided no evidence to support his statement that the imposed levy would avoid additional business costs. The elasticity of demand and market competition are factors that influence whether businesses pass on the costs to consumers. The levy will impact the business sector’s financial performance, increasing production and operating expenses. Businesses will have to raise their prices to avoid losses and reduction in profit margins. This leads to consumers bearing the burden of these levies.

In consequence, this will reduce the competitiveness and profitability of MSMEs and startups, potentially leading to job losses and declining economic growth. The levy will also significantly impact students already dealing with the increased cost of living and student loans. 

For years, the poor condition of our healthcare system has been a concern to our citizens. Neither the Minister of Health nor the Prime Minister provided a comprehensive plan for achieving universal healthcare, including specific initiatives, timelines, and budget allocations. Last year, the government’s budget for the health sector was $10 million more than this year, raising questions about why the government should introduce a Health and Security levy.

Moreover, the lack of transparency regarding the government’s calculations for the expected $33 million revenue from the levy only adds to the suspicion that this decision is politically motivated, eroding public confidence in the government’s decision-making processes. As citizens, we expect transparency and accountability from elected officials.

Governments in Saint Lucia and other countries have long spoken about the importance of universal healthcare. However, only a few have successfully implemented it. The lack of a clear plan or strategy often results in poorly executed, unsustainable initiatives and failure to achieve their intended goals.

Incidentally, no information indicated how much of the questionable S33 million from the Health and Security Levy is allocated for crime prevention initiatives and social programs to increase security measures and return St Lucia to a place of harmony.

In conclusion, we expect that the introduction of the Health and Security levy in Saint Lucia will have far-reaching consequences for the economy and people of our island, particularly the poor and marginalized. The Cabinet of Ministers, Members of Parliament and The Senate must consider the negative impacts and withdraw this levy as there is an obvious need for more significant critical thinking and reasoning in analysing the financial pain to Saint Lucians.