VAT comes into effect in SVG on 1st May 2007. The ULP regime argued that VAT will streamline taxation in SVG and that VAT will not push up inflation. SVG Green Party believes VAT will push up inflation, will not stimulate the SVG economy nor make it stronger.

In the 2007 Budget Address, p50 – 51, the ULP regime states that it has reduced various tax rates for individuals and companies. On page 50, they state also that they will introduce VAT. So, the left hand of the ULP will be handing out EC$4 million dollars, but the right hand will be taking from you, in VAT, EC$96 million in 2007 and a staggering EC$162.8 million in 2008.

So, per capita, for every dollar you may save in income tax (the unemployed and retired don’t benefit with this) the ULP takes from you 24 dollars in 2007 and in 2008, for every dollar the ULP regime gives you they will take away 41 dollars.

The likely impact of VAT on the SVG economy:

1. VAT will push up inflation;
2. the cost of living will be pushed up and will put pressure on the poor;
3. VAT will widen the competitive gap between indigenous produce and imported goods;
4. VAT will push up the demand for much higher pay rises by employees;
5. the stability of small businesses will be adversely affected;
6. overhead costs of running a small business will increase;
7. the difference of the price of goods between street vendors and supermarkets will increase and will likely put numerous street vendors out of business;
8. VAT will provide more money for the inefficient ULP regime to throw to the wind;
9. VAT will make the economy weaker;
10. VAT on electricity is short-sighted. It is arrogant thinking by the ULP regime and is a backward step with regard to the economy.

The recent restructuring of the SVG economy is the type of restructuring seen with failing economies.

The ULP government must immediately raise the pay of low-paid workers and exempt unemployed and retired people from VAT, so these people can avoid hardship and trouble.

VAT will push up prices and inflation. VAT is regressive as it doesn’t take in to account differentials in wealth and income. VAT will significantly hurt the poor and low-income families. The high level of unemployment in SVG is a core problem and VAT will have a negative impact on unemployment and may push up crime.

Barbados, Jamaica and Trinidad had a tangible increase in serious crime after the introduction of VAT. SVG Green Party believes crime may increase in SVG after VAT comes in to effect, as disadvantaged groups try to cope with the pressure of VAT and may see crime as their only way to survive.

An SVG Green Party government will abolish VAT as it puts enormous pressure on the poor and unemployed, and will put a drag on the SVG economy. For example, VAT will put an extra dollar on the price of cement. SVG Green Party is demanding that the ULP government not punish people and businesses with VAT.