Following a request from the Government of Saint Lucia, in March 2012 Saint Lucia received approval from the Council on Trade and Economic Development (COTED) for the suspension of the CET on pharmaceuticals for a period of four years, from May 1, 2012 to April 16, 2016.
The approval was given with the objective of cushioning the impact of the introduction of Value Added Tax (VAT) in October 2012 on the prices of pharmaceuticals.
Cabinet, by Conclusion No. 279 of 2012, approved the decision of COTED and Cabinet’s decision was given legal effect through Statutory Instrument (SI) No. 152 of 2012, dated December 3, 2012 and signed by the Minister for Finance on December 19, 2012.
However, after much public agitation, the removal of the VAT on medication took effect pursuant to Statutory Instrument No. 65 of 2014 on 30th June 2014.
The suspension of the CET on pharmaceuticals was supposed to have expired on April 16, 2016.
This means that the old CET rates on pharmaceuticals were supposed to have been in effect from April 17, 2016. Reverting to the old CET rates was supposed to have been an automatic process administered by the Customs and Excise Department, as required by law. However this was not done.
The Customs and Excise Department noted the need to revert to the old CET rates on pharmaceuticals on Monday September 12, 2016 and informed the Research and Policy Department of the Ministry of Finance.
The Minister for Finance was not informed of these developments, neither was the Cabinet of Ministers and the CET adjustment was not as a result of any decision by Cabinet. The Customs and Excise Department implemented the old rates effective Wednesday September 21, 2016.
It should be noted:
1. that reverting to the old CET rates on pharmaceuticals should not affect the prices of the existing stock of pharmaceuticals at the various pharmacies and other retail outlets as they would have been subject to the lower rates of CET. Only pharmaceuticals that were imported from September 21, 2016 would be subject to the new higher CET rates.
2. that these rates though higher than the applicable rates from June 2014 up until September 21, 2016, would still represent a reduction on the original rate prior to October 2012.
3. CET is not VAT. Since 2014 Pharmaceuticals are VAT exempt and this has not been reversed
by the Government.