KINGSTOWN, St Vincent and the Grenadines, Tuesday February 7, 2017 – As Prime Minister Dr. Ralph Gonsalves buckles down to tackle the island’s burgeoning deficit, Vincentians will have to dig deeper into their pockets to help replenish the Government’s coffers.
As he presented an EC$976.4 million (US$361.6 million) budget on Monday, Gonsalves announced a range of new taxes, saying that while the country was holding its own it was facing serious fiscal challenges.
“One such challenge is the high cost of servicing the public debt….Connected directly to this is the frequency of natural disaster,” he said.
Starting May 1, the Value Added Tax (VAT) will rise by one per cent to 16 per cent, as the Government imposes a new levy on consumption to shore up the Contingencies Fund.
Gonsalves, who is also Finance Minister, explained the move was to counter government’s heavy spending on natural disasters since 2010, which accounts for about 10 per cent of the public debt.
“The most efficient way to give effect to this measure is to increase the standard rate of the VAT from 15 per cent to 16 per cent and the rate for accommodation and other tourism related activities from 10 per cent to 11 per cent,” the Prime Minister said.
The measure is expected to yield EC$10 million (US$3.7 million) in revenue.
Cellphone users are also facing possible increases for their services from next month.
Gonsalves outlined that the two per cent Telecommunication Levy which was introduced last year on outgoing calls will now be applied to incoming calls and date.
The revenue earned will be allocated to the Zero Hunger Trust Fund which the Government set up to eradicate hunger.
Relief is however underway for some citizens, with the increase in the VAT threshold from EC$120,000 (US$44,444) to EC$300,000 (US$111,111). According to the Vincentian leader, some 800 registrants, including professionals, will be removed from the VAT registers as a result.
Gonsalves however announced a 20 per cent increase in fees payable under the Professions Licensing Act to help restore some of the losses from the increase in the VAT threshold.
Announced tax hikes will also affect travel.
Mere days before the opening of the state-of-the-art Argyle International Airport, Government said departure tax would double, moving from EC$50 (US$18.52) to EC$100 (US$37.04).