Prime Minister Allen Chastanet has promised Saint Lucians that his administration will fulfill their campaign promise of eliminating the Value Added Tax (VAT). In the United Workers Party’s 2016 manifesto, they promised “the reduction and ultimate elimination of the dreaded Value Added Tax,” and indicated that it would be replaced with a “restructured tax regime that will be less burdensome, without compromising the revenue base.” In 2017 the rate was reduced from 15% to 12.5%.
At Tuesday’s House of Assembly sitting, Chastanet argued that VAT cannot be completely eliminated “until we have an ability to provide the more vulnerable people in this country directly with the things they need.” The prime minister was speaking on a motion to borrow US $20M from the International Development Association to finance the Caribbean Digital Transformation Project — a project which aims to “increase access to digital services, technologies and skills by governments and businesses.”
Chastanet says that the E-government platform is a critical mechanism to make more services available to all Saint Lucians in an efficient manner. “When we know that there is a proper social infrastructure, supporting the needy people of this country, then we can change the VAT rate,” he said. “When we start getting out of the business of subsidizing rice, flour and sugar for everyone. Because while it’s a nice thing, it means that the cost of trying to help poor people, Martiniquans and hoteliers and everybody else are benefiting from the subsidy. That’s grossly inefficient and we have to find a better way, and that’s what this E-government platform is supporting.”
“Members on the opposite side said we could never do it,” Chastanet said, speaking on the VAT rate reduction later in the debate. “We’re very proud of the fact that we have done it.”
“You said you would eliminate it,” opposition leader Philip J. Pierre reminded the prime minister.
Chastanet’s response: “We said that we would reduce the VAT and we would eventually look to replace the VAT. And so we’ve come in and we’ve reduced it to 12.5%. We lived up to our initial commitment and we have every intention of being able to eliminate it. But there are some things that have to happen before we can do that.
“And this E-government platform is going to be critical to that. So in addition to the social network, in order to be able to have taxes online, all those things have to be in put in place and we will eliminate VAT,” he asserted.
