Prime Minister, Allen Chastanet, has announced a reduction in the standard rate of Value Added Tax (VAT) from the current fifteen to 12.5 percent.
The long-awaited announcement came tonight as Chastanet delivered an address to the nation.
The reduction in VAT will take effect as of February 1, 2017.
The Prime Minister said this means that an estimated 52.5 million dollars a year will be pumped back into the hands of the people of this country.
He revealed that tomorrow the various legislation to put in place the airport charge and the new VAT relief measures will come before the House of Assembly.
“In our manifesto we promised the people of Saint Lucia a restructured tax regime that will be less burdensome without compromising the revenue base and we aim to keep this promise,” Chastanet said as he announced the new measure.
He asserted that VAT affects all Saint Lucians every day.
“It has destroyed businesses and drained our people to the core,” the Prime Minister stated.
He explained that the decision to reduce VAT was not taken lightly.
Chastanet disclosed that his administration took time to review the current VAT system and commissioned a study by Ernst and Young to do a comprehensive review of the tax.
He said this was combined with a report from the Caribbean Development Bank (CDB) and discussions with various financial agencies such as the Eastern Caribbean Central Bank and the International Monetary Fund.
The PM said the government received several recommendations on reforming the VAT system.
“My brothers and sisters, they said it could not be done. Saint Lucia we have done it and we will do more,” Chastanet declared.
He promised that the United Workers Party (UWP) administration will continue to review the tax regime.
Chastanet gave the guarantee that the overall objective of of his government’s tax policy is to grow the economy and reduce the tax burden on the population, while making the tax system more business and investment friendly while ensuring fiscal sustainability.