(Excerpts of Dr. Friday’s Press Conference)
Once more, the government has increased taxes on the Vincentian people. This time it is in the form of an increase in the Customs Service Charge (CSC). The CSC has been increased from 5% to 6% i.e. a 20% hike in the CSC.
The Customs service charge is a tax paid on all goods imported into the country. St. Vincent and the Grenadines is a small open economy. We import most of what we consume. Therefore, the CSC is included in the price of most of the things that we buy and use in St. Vincent and the Grenadines. So, its effect is very broad.
Furthermore, the CSC increase will affect VAT as well. That is to say, the amount of money the government will collect on each VAT item will increase. This is because VAT is charged on the goods after the value of those goods has been raised by the higher customs service charge.
What does this mean for us? By raising the CSC from 5% to 6%, the price of most goods we buy in the store or bring into the country for ourselves will go up. In fact, some prices have already gone up. People have noticed it. We will pay more for almost everything we use, including foodstuff: e.g. cooking oil, corned beef, chicken and other meats, salt, rice, sugar, macaroni, juices, ketchup, seasonings, detergents, soap, shampoo, school supplies, clothing and shoes, and everything else that we get at the grocery stores and clothing stores.
We will pay more for hardware goods: lumber, cement, galvanize, bathroom fittings, nails, screws, paint, etc. We will pay more for other household goods: pots and pans, cloth, linoleum for your floor, light bulbs, plates, spoons, and heavy appliances such as stoves, fridges and microwave ovens will cost more. And we will pay more for motor vehicles of all kinds will cost more to import.
The bigger the purchase, the more money the government will collect and the more you the consumer/taxpayer will notice the increase.
How much will Government collect?
The government expects to collect $8 million directly from the increase in the CSC. This estimate does not include the additional amounts the government will also get from VAT (i.e. after VAT is charged on goods whose value has been increased by the higher CSC).
In other words, the increase is expected to earn the same amount, or more than the government earned additionally when it raised VAT from 15% to 16%, five years ago.
So, this is not a small thing. The Minister and others in the government would like us to believe it is a small thing. It amounts to a very significant tax increase that will affect everyone- rich and poor, employed and unemployed directly. Every time we buy something in the store, or someone sends something for you from overseas, you will be paying the tax.
What is this money to be used for?
The money is not to be used for spending on things here in St. Vincent and the Grenadines. It is not raise from all of us to help those suffering more from COVID economic fallout. It is to be used to pay various regional organizations to help them to cover their operating expenses. The Minister of Finance sought to explain it in his Budget Address.
The following organizations were mentioned in the Budget Address and provided for in 2021 Estimates: Caribbean Public Health Agency (CARPHA), ($113,000; Pan-American Health Organization (PAHO), ($60,000); Regional Security System (RSS), ($2M); Caribbean Disaster Emergency Management Agency (CDEMA), ($255.7K); CARICOM Implementing Agency for Crime and Security (IMPACS) ($278,450); Caribbean Institute of Meteorology and Hydrology, ($250,000); Caribbean Meteorological Services($40,610); Seismic Research Centre, ($400,000); Eastern Caribbean Civil Aviation Authority, ($900,000) and the OECS ($3.18m). CARICOM, (1.16m) and the Eastern Caribbean Supreme Court, ($2.2m) were also added later.
We do not question the important roles that these regional bodies play for St. Vincent and the Grenadines and the Caribbean. But, we must question, why now a tax increase for them? Why must the government impose a special tax on the people of St. Vincent and the Grenadines to pay these organizations at this difficult time? This question is important not only because of the special times we are in as a result of the COVID 19 pandemic, but also because the government imposed a similar tax in 2015 for the same reasons that should have paid all of theese organizations already.
The 2015 Estimates provided the following sums for these organizations: Caribbean Public Health Agency (CARPHA) (Not mentioned); Pan-American; Health Organization (PAHO), $115,000.00; Regional Security System (RSS, $1,800,000.00; Caribbean Disaster Emergency Management Agency (CDEMA), $100,000.00; CARICOM Implementing Agency for Crime and Security (IMPACS) (Not mentioned); Caribbean Institute of Meteorology and Hydrology, $155,000.00; Caribbean Meteorological Services, $87,000.00; Seismic Research Centre, $190,000.00; Eastern Caribbean Civil Aviation Authority, $485,000.00; OECS, $2,500,000.00; CARICOM, $654,000.00 and the Eastern Caribbean Supreme Court, $2,100,000.00, a total of $8,186,000.00.
Over the years, the government came to Parliament, especially in the Estimates it presented, and set out the amount of money needed to pay each of these regional organizations. Parliament approved it. What did they do with that money? The government obviously spent on other things and now they are coming to the people to ask for more money through raising the CSC, again.
The people of this country are going through hell right now! We are going through a period of great economic pain and great uncertainty brought about by the mismanagement of the economy by this government, and there is uncertainty about what the immediate future holds.
We were put in this position by bad financial management, which was made a lot worse by the COVID 19 Pandemic and the way the government has mishandle