CASTRIES, St Lucia, Tuesday May 14, 2013 – Prime Minister Dr Kenny Anthony will provide details of his administration’s fiscal policy for the next 12 months when he presents the national budget to parliament today.
The government is expected to table an EC$1.3 billion (one EC dollar = US$0.37 cents) fiscal package and has already indicated that the recently introduced value added tax (VAT) would not be increased.
“I want to make it clear, contrary to rumours being circulated, that the government of St Lucia has no intention to increase VAT beyond the 15 percent,” Anthony, who is also the finance minister, told legislators late last month during the debate on the estimates.
Anthony said the VAT is expected to generate EC$256 million in revenue for this fiscal year.
Last December, government revealed that it collected EC$25.14 million from the tax that was introduced last October, replacing several taxes including the consumption tax, hotel accommodation tax, and environmental protection levy.
St Lucia was the last country in the Organisation of Eastern Caribbean States (OECS) to introduce the VAT.
The budget is being presented against the backdrop of a tight economic situation, which has resulted in a reduction in total allocation for the next fiscal period.
“With the contraction of the world economy, many countries have sought to implement measures to curb expenditure for fear of plummeting into financial crises,” said Anthony.
The government has already signalled its intention to cut spending and during the presentation of the estimates late last month, the total expenditure was EC$134 million less than last year’s figure.
Anthony said it was necessary to contain the island’s fiscal deficit, which currently stands at an estimated nine per cent of Gross Domestic Product (GDP).
The government also said it intends to cut capital expenditure by more than 20 percent with Anthony saying that he believes this may be the first time since 1979 that a calculated effort has been made to reduce government’s expenditure.
The debate on the budget statement will be held on Thursday and Friday.