Parliament, on Tuesday, passed a law moving the Customs Service Charge from 5% to 6%, a change that Opposition Leader Godwin Friday told lawmakers will have “a very significant effect and consequences”.
“This is a wicked tax at this time because it will cause great hardship right across the board because it affects everybody,” Friday said in a debate in which opposition lawmakers opposed the measure.
“So let’s ask the question. And the minister may confirm this when he speaks. He raises let’s say, 8, 10 million dollars from this tax? Where is that money coming from? Who is paying the money?”
The change in the surcharge was the only revenue measure introduced in the Budget approved in February. It became law on Tuesday, when lawmakers approved the measure, without opposition support.
“Who is it going to? Whose lives will it make better?” Friday said, even as he noted the importance of the regional institution that the money will fund.
The monies will be used to finance the government’s contribution to regional organisations and agencies, including, the Organization of Eastern Caribbean States (OECS), CARICOM, Caribbean Public Health Agency (CARPHA), the Pan-American Health Organization (PAHA), the Regional Security System (RSS), the Caribbean Disaster Emergency Management Agency (CDEMA), the CARICOM Implementation Agency for Crime and Security (IMPACS), the Caribbean Institute of Meteorology and Hydrology (CIMH), the University of the West Indies (UWI) Seismic Research Centre (SRC), and the Eastern Caribbean Civil Aviation Authority (ECCAA),
He said that if the government has not been paying its dues to these regional institutions it could not blame this Parliament or taxpayers, because money was voted every year for these payments.
“But when it has gotten so bad that you feel that you have to put something in there to make it mandatory,” he said, referring to the Automaticity of Payment (Specified Regional Institutions) Bill, also passed on Tuesday, which will automatically make the payments to the relevant regional institutions.
The opposition leader noted that even with the passage of the Automaticity of Payment law, the government could still opt to not pay its dues to these regional organisations.
“But the point is, we cannot, at this time, afford any measures that put harsher taxes on the people of this country. The people have been taxed and taxed too much,” the opposition leader said.
He said it is becoming the practice of the government of not increasing “usual taxes” even as it introduces or amends levies and surcharges.
“So the practice now has been to have these special pockets of funding that you create, and somehow the rate of the taxes that we are familiar with stays where it is.
“But at the end of the day, people are putting their hands in a pocket and still saying, ‘Geez, you know, I got less now than I had before. How is that possible?’ It is possible because the taxes are coming elsewhere; they’re just not calling it that. Call it a fancy name ‘levy’, ‘surcharge’ or ‘service charge’.
Friday said that the opposition objected to the measure when it was mentioned in the Budget.
“In reality, the one-percentage-point increase as the minister … amounts to a 20% increase in the Customs Service Charge, because it goes from 5% to 6%.
He said that the economic reality of St. Vincent and the Grenadines must be weighed against the “good intentions” of the revenue measure.
“We are a small open economy. Virtually everything we consume, especially manufactured goods, … we import. And so what it means is a customs service charge affects a broad range of items.
“And, therefore, its economic impact can’t be masked by saying that, ‘Oh, it’s only a one-percentage point increase from five to 6% and is only Customs service charge, it’s not the Customs duties themselves.”
He said the tax is likely to affect the price of all grocery and hardware items.
Friday, however, said that his understanding is that the government hopes to raise between EC$8 million and EC$9 million dollars from the revenue measure, even as he said the 2021 Budget did not intend to raise taxes.
He said that when opposition lawmakers raised the issue during the Budget Debate, it was to urge the government to reconsider the measure at this time.
“So there was always the possibility that the opposition having flagged the matter one is concerned and others haven’t taken it up subsequently in the public domain, whether it’s on a radio stations, in the newspaper articles, that it was possible that the minister would have said, ‘You know what, let’s hold off on this.’ But the first measure in this parliament is again to raise the tax,” Friday said.
He said that regional institutions and agencies are valuable, singling out CARPHA, PAHO and the UWI-SRC, because the country is using their services amidst the coronavirus pandemic and the on-going effusive eruption of La Soufriere.
“The minister thinks that it is, therefore, easy for people to accept that this is something that they should pay more for. We are not paying the institutions more but the people of the country are being asked to pay more out of their pockets,” Friday said.
In responding to the opposition’s concerns, Minister of Finance, Camillo Gonsalves, said that the revenue measure would not have on the population, the impact that the opposition claimed.