Stop Im­pov­er­ish­ing Econ­omy For The Ben­e­fit Of Govern­ment!

The Star (St. Lucia) - - LOCAL -

This is my first op­por­tu­nity to ad­dress this hon­ourable House and so I should go on record by ac­knowl­edg­ing the good faith that Her Ex­cel­lency has demon­strated in me by ask­ing me to serve in this ca­pac­ity. Mr. Pres­i­dent, specif­i­cally on the VAT re­duc­tion—which in fact is not 2 per­cent but 16 per­cent. If you take 2.5 per­cent off 15 per­cent it is ac­tu­ally a 16 per­cent re­duc­tion—which I think is a sig­nif­i­cant mat­ter in the eco­nomic life of any coun­try. I find the de­bate very in­ter­est­ing and feel priv­i­leged to wit­ness it. It is par­tic­u­larly in­ter­est­ing be­cause, if mem­ory serves, the mat­ter of VAT spans at least three ad­min­is­tra­tions and it is in­ter­est­ing to hear the opin­ions vary on both sides. But the point is, Mr. Pres­i­dent, that when we first con­tem­plated VAT for this coun­try, the econ­omy was on a growth path and it was not en­tirely un­re­al­is­tic to con­tem­plate VAT, as many other Caribbean coun­tries did with some en­dorse­ment from the mul­ti­lat­eral fi­nan­cial in­sti­tu­tions, at 15 per­cent.

What hap­pened is that we waited quite some time be­fore ac­tu­ally im­ple­ment­ing it. By that time eco­nomic cir­cum­stances in the coun­try and the re­gion had changed dra­mat­i­cally. What we ac­tu­ally got when we im­ple­mented the VAT was an in­fla­tion­ary tax in a re­ces­sion­ary econ­omy. That is not opin­ion; it is clearly ob­jec­tive fact and the im­pact that this well-in­ten­tioned mea­sure had on the Saint Lu­cian econ­omy was sig­nif­i­cant. For­tu­nately, we are at a point where we are big enough to think about the im­pli­ca­tions of that mea­sure. I would like to hope that it is part of a wider strat­egy to re­view the en­tire fis­cal regime cur­rently fac­ing the econ­omy and that is to say, as was re­cently re­vealed by stud­ies and var­i­ous govern­ment of­fi­cials and au­thor­i­ties, we do have a very oner­ous tax regime in Saint Lu­cia and in much of the Caribbean as a mat­ter of fact where we have seen Govern­ment grow, I would sub­mit, at the ex­pense of the pri­vate sec­tor. Where suc­ces­sive ad­min­is­tra­tions have felt that it was nec­es­sary for govern­ment to be the en­gine of growth, and for govern­ment to be the em­ployer of first and last re­sort and con­stantly to be seek­ing ad­di­tional rev­enue to make that pos­si­ble.

I think we some­times for­get the old adage, Mr. Pres­i­dent, that poor pau­per poor king and one of the rea­sons that we have the kind of growth rates that we have seen over the last sev­eral years cross­ing more than one ad­min­is­tra­tion is be­cause the coun­try is in fact over-taxed and growth has been the vic­tim. Growth em­a­na­tion from the pri­vate sec­tor, from in­di­vid­u­als, from govern­ment it­self. We have seen what I con­sider to be over­tax­a­tion of the en­tire econ­omy. What we have not seen is a com­men­su­rate in­crease in pro­duc­tiv­ity or an in­crease in ef­fi­ciency. So we keep suck­ing the life out of the econ­omy in or­der to sup­port larger and larger govern­ment. This is not a crit­i­cism that is handed to one of the other; this is some­thing that has been go­ing on not only in St Lu­cia but across the Caribbean.

And when the man­ag­ing di­rec­tor of the IMF com­ments on the par­lous state of our economies, which are trapped in growth rates of less than one or less than two per­cent, and know­ing the pop­u­la­tion growth that we have, we can see that this is not the best sit­u­a­tion to be in. So first of all I think it is very use­ful that we are do­ing a study of the tax regime in Saint Lu­cia. I think that we need to com­pare our­selves with the other coun­tries with whom we are com­pet­ing, not only like economies in the Caribbean, but across the spec­trum of in­vest­ment des­ti­na­tions, of which we are only one.

It is true that a num­ber of per­sons have ex­pressed a num­ber of con­cerns about the tax regime; we are heav­ily taxed in Saint Lu­cia and in the Caribbean and that just speaks to the in­ef­fi­ciency of the pro­duc­tive sec­tor. So the fun­da­men­tal point here is that I hope there is go­ing to be a com­pre­hen­sive re­view of the fis­cal regime to bring re­lief to not just one set or an­other set of the pop­u­la­tion but across the en­tire econ­omy, so that we can have a re­sump­tion of growth. Govern­ment can­not grow at the ex­pense of the rest of the econ­omy. You need to have growth com­ing up from the grass­roots; from the pri­vate sec­tor big and small; from the mid­dle class big and small so the whole coun­try can be pros­per­ous and not one sec­tor at the ex­pense of the other.

We should con­sider in con­text the fact that the over tax­a­tion has cre­ated a cer­tain fragility in busi­nesses across the econ­omy. Most busi­nesses, ex­cept for the very big and the very ex­empt and the very favoured, are gen­er­ally highly lever­aged. We are in debt to the bank­ing sys­tem, which is it­self frag­ile. A lot of busi­nesses are highly lever­aged, which means they can­not bor­row; they can­not grow; they can­not in­vest. This has a damp­en­ing ef­fect on em­ploy­ment, in­vest­ment and all the good things we want to see hap­pen in Saint Lu­cia. The re­sult: busi­ness clo­sures, loss of jobs, shrink­age, cut­backs in em­ploy­ment, cut­backs in in­vest­ment.

It has been some time since some of us have been ask­ing for a re­newed in­ter­est in do­mes­tic in­vest­ment. What has been hap­pen­ing for a long time is we have a whole ap­pa­ra­tus of govern­ment de­voted to for­eign di­rect in­vest­ment, as if for­eign di­rect in­vest­ment is not a process of re­duc­ing own­er­ship of crit­i­cal na­tional as­sets by Saint Lu­cians and hand­ing them over to other per­sons who do not look like us. We need an em­pha­sis on do­mes­tic in­vest­ment, Mr. pres­i­dent, so that both sec­tors can grow in part­ner­ship rather than this em­pha­sis on Mes­si­ahs from abroad who are go­ing to res­cue us from 0 and 1 per­cent and neg­a­tive per­cent growth.

I would like to make an ap­peal for us to con­cen­trate on re­align­ing our in­vest­ment pol­icy, so that we are think­ing about part­ner­ships; we are think­ing about busi­ness across the board; large, small, for­eign, lo­cal, joint part­ner­ships and ven­tures which speak about the ef­fi­ciency of Saint Lu­cia as a place to pro­duce and as a place to do busi­ness. Some­where that peo­ple come to and en­ter into part­ner­ships with us as Saint Lu­cians; whether as em­ploy­ers, as em­ploy­ees, whether as busi­ness part­ners, whether as in­vestors and co-in­vestors. Let us try to look at the en­tire spec­trum of the econ­omy and how we can gen­er­ate growth, ir­re­spec­tive of who hap­pens to be in power.

The Govern­ment alone can­not be the sole provider of all things. We need to stop im­pov­er­ish­ing the rest of the econ­omy so that govern­ment can grow and grow and grow. That is not sus­tain­able. We note also Sir, and some­body men­tioned it ear­lier, that there is VAT on im­ports. This is con­trary to pre­vi­ously ex­pressed govern­ment fis­cal pol­icy. We in fact have in­ci­dents of double tax­a­tion—where peo­ple are pay­ing con­sump­tion tax twice; or VAT twice. And that is an ex­pense to the prof­itabil­ity and the pro­duc­tiv­ity of any busi­ness. So that you have not seen peo­ple ex­pand­ing their busi­nesses, you have not seen peo­ple ex­pand­ing their work­force; you have not seen peo­ple even paint­ing their premises.

If you go around Cas­tries and the en­vi­rons and be­yond, you will ob­serve that most busi­nesses are in a de­plorable con­di­tion, even in high streets in the mid­dle of towns and vil­lages across this coun­try. The pri­vate, sec­tor large and small, has not had the abil­ity to grow for some time now and I think that needs to be re­versed if we are go­ing to see any se­ri­ous im­prove­ment in the eco­nomic con­di­tions of reg­u­lar ev­ery­day Saint Lu­cians in this coun­try.

I would like to para­phrase a slo­gan made pop­u­lar by the Pres­i­dent-Elect of the United States: “Make Amer­i­can Great Again.” I would like us to Make Saint Lu­cia Grow Again! If we put an em­pha­sis on growth, as op­posed to rhetoric, I think we will find our­selves do­ing a lot bet­ter, be­cause we will ex­am­ine what might be the im­ped­i­ments to growth and try to re­move them so that we also de­volve re­spon­si­bil­ity and power from this over-cen­tral­ized form of govern­ment that we have to ev­ery cit­i­zen of the coun­try and let them be re­spon­si­ble for their own ad­vance­ment, as­sisted by the ap­pa­ra­tus of the pub­lic sec­tor of govern­ment.

I am cur­rently men­tor­ing a young man who has been try­ing to get a grant to open a small busi­ness and you would not be­lieve the hur­dles and dis­in­cen­tives that have been thrown at him—in­clud­ing from peo­ple who are sup­posed to be look­ing out for our young en­trepreneurs. They do not re­spond to him, they seem not to care. All of this time the young man’s frus­tra­tion is mount­ing and mount­ing and mount­ing. I am sure he is typ­i­cal of young peo­ple in this coun­try whose fu­ture is in the hands of peo­ple like us in this room.

So let us try and em­power our peo­ple; let us try and get govern­ment out of the way, ev­ery now and then, be­cause govern­ment can some­times be a huge boul­der block­ing the high­way of progress.

Let us try not to think of our­selves as the be all and end all of ev­ery­thing. Let us unite to re­move the ob­sta­cles to growth. I be­lieve that a 16 per­cent re­duc­tion which is what it is; a 16 per­cent re­duc­tion on the in­ci­dence of VAT is in fact an im­por­tant mile­stone in the life of the coun­try. As I said ear­lier, I hope it is part of a com­pre­hen­sive re­view of fis­cal pol­icy and let us gen­er­ally try to re­duce the in­stances of tax­a­tion on cit­i­zens and busi­nesses alike.

In­de­pen­dent Se­na­tor Adrian Augier de­liv­ered his ad­dress in the Se­nate which pri­mar­ily fo­cused on the much talked about changes to the Value Added Tax.

Newspapers in English

Newspapers from Saint Lucia

© PressReader. All rights reserved.