PM addresses VAT on ‘What Makes Me Mad!’

On the morning commute to work I usually flip through several radio stations to get a feel for what’s happening in St Lucia. We have so many these days, after all. Yesterday morning thankfully my dial was tuned to Radio 100 just in time to hear Andre Paul announce that he was expecting St Lucia’s Prime Minister Dr Kenny Anthony as his special guest on the morning talk-show ‘What Makes Me Mad’. Andre was excited, to say the least, and Dr Anthony was bang on time.

The show started on a somber note as the Prime Minister reminded the nation that Tuesday marked the anniversary of the passing of hurricane Tomas that had ravaged the island and left several dead. After asking St Lucians to devote at least a minute of their day to acknowledge the occasion, Dr Anthony appeared, at least from what I heard to switch to a more upbeat mood, as he got down to addressing the issue of Value Added Tax.

“I am really happy to be here to help to clarify and explain because it’s obvious too that there is a lot of misinformation and some of it is understandable,” the PM told Andre Paul. “At the same time I am here to share concerns with people and to say to them that they must never ever think that I am not listening or the government is not listening but at the same time it is helpful if we clarify. I have always said that there will be imperfections with the implementation of VAT and we have to have courage to make adjustments; but of course the timing of the adjustments would be critical factor. It is a period that we have to scrutinize and assess carefully and it is a period that we have to be careful how we exercise our judgement. But the point is we have to have an open mind and if necessary make those adjustments down the road.”

Paul then allowed the PM to delve into the history behind the implementation of the tax that Dr Anthony had while he was in opposition called “oppressive”. The PM repeatedly made the point that he was not on the show to “blame anybody” for the state of the St Lucian economy.

Referring the fiscal deficit “we inherited” he said “it was not all the fault of the previous government.”

“We had a hurricane,” he admitted. “We got little or no help from outside so what this has meant is that government has had borrow heavily to cope with the expenditure of Tomas. So what it has also caused is the amount of debt has increased significantly. So, we are in the danger zone. That is a reality.”

But isn’t cutting back on expenditure an option? Dr Anthony preempted the question, after all, earlier in the discussion he had given an example of how a household balances their budget when they hit hard times.

“Yes, there is some expenditure we can cut back on. But what are the consequences of that cutting back? We will have to fire people from the public service . . .” the PM noted. (An area politicians dare not venture).

Asked by the host about why the government had decided to implement VAT at a rate of 15 percent and not less the PM said the answer was “very simple” nonetheless despite the simplicity of it he would have to go through it “as carefully as possible.”

He explained that VAT was a replacement tax and not a new tax. He gave the history of consumption tax, environmental levy and import duty. He mentioned that VAT had to be put at a level that guaranteed government the same revenue they had collected from other taxes before. (Wasn’t the idea to collect more?) Another reason was for us not to be “out of step” with our Caricom sistren and brethren.

The rest of the interview was pretty steady with the PM repeating what had been said by the VAT office over the last few months, including reading a long list of exempt and zero-rated goods.

As the lines opened to callers, the PM faced questions about condensed milk, cheese, medical supplies, among other things. While addressing one woman’s question about the price of some goods Dr Anthony decided to address the direction of VAT discussions in St Lucia.

“It is very good that the people of St Lucia are engaged in this public conversation on VAT. I am very proud of St Lucians. Everywhere throughout the world when you introduce VAT there is always debate, there is always disagreement, there is always anxiety and we have had our fair share here but the message that I get from St Lucians is this, ‘look we had no choice at some point we had to do it; there are issues, we have to deal with the issues’. But the debate is not about the necessity of the measure and for that I am exceedingly grateful and I want to thank the people of St Lucia.” (I say we all take a collective bow!)

A memorable male caller appeared to almost sing “good morning” to the PM. Began the caller: “Mr Prime Minister I am very concerned with my purchase of soy milk. My wife is unable to use cow milk.” “Okaaay,” said Dr Anthony. “We use soy but then we have to pay VAT and it is hurting us,” his voice heightened. “Right,” said the PM. “Pardon?” asked the caller as if he expected more. “Yes, I heard you,” said the PM. “What can be done about it?” pressed the singing caller further. “In the short term will VAT be removed from it?”

Finally the PM said: “What I can tell you sir is this: we need to get all this information and you are very right because I know there are a lot of people who cannot cope with cow’s milk and here we are, we made powered milk exempt, so that it is one of those items we can take on board as we begin to look at the adjustments that have to be made. But you need to be a little patient with us because we need to get all the information, be sure that we look at a price that soy milk was being sold before VAT and after VAT to make those judgements.”

In the final question of the day the host asked the PM why he had accepted responsibility for the implementation of VAT.

“ . . . In this country we are fond of the blame game,” said Dr Anthony. “I currently occupy the prime minister’s chair and I am also the minister of finance and therefore I am the one, for all practical purposes, that has to bear the responsibility because it emerged from my office and from the ministry than I [head] and obviously my Cabinet would be part of that decision making process. So I don’t want to engage in the blame game . . . I want it to be understood that in the position that I have where VAT is concerned the buck stops with me . . . There are some responsibilities in office that are unavoidable. I know that the adjustments are not easy for many. I am proud so far of how St Lucians have handled this. I want them to know that I listen to them. I share what they are saying. I want to ask for their patience.”

The PM then repeated some of the what he had said during the show en langue mamamn nous for the Creole audience.