Kingstown – The Unity Labour Party government rejected proposals from Opposition Leader, Dr Godwin Friday to help Vincentians cope with the rising cost of living.
In a national address last week, the Opposition Leader outlined suggestions from the New Democratic Party (NDP) for helping the country cope with the increasing prices.
They included reducing the value added tax (VAT) rate from 16 per cent to 13 per cent, rescinding the increase in the customs service charge, and capping the fuel surcharge on electricity.
Prime Minister Dr Ralph Gonsalves said, however, the proposals would cost the government in excess of EC $120 million (U.S. $44.4 million) in revenue and affect its ability to pay salaries.
He noted that the NDP had promised to slash the VAT rate in half, which would result in a loss of about EC$96 million (U.S.$35.5 million), during the 2020 election campaign, and he claimed the party subsequently “saw the absurdity of that”.
“So even now the situation is challenging with COVID and the volcano, they dropped reducing it by half — just by three percentage points, from 16 to 13,” Gonsalves said. “But that’s EC $36 million (U.S. $13.3 million) on an annualised basis.”
Even bigger losses would be recorded if the proposal on the customs service charge was accepted, the Prime Minister said.
Responding to the Opposition Leader’s appeal for the government to increase support for lower-income families by expanding existing support programmes, Gonsalves said: “Well, he hasn’t mentioned that we are the only country, the only government, that ever borrowed money, U.S. $13 million from the World Bank and gave people (bank) cards. We widened the social safety net in every respect.”
Gonsalves noted that the Opposition Leader also suggested import duty concessions for the public transport industry. He said if the duty was halved, the government would lose around EC $30 million (U.S. $11.1 million).
He also noted that the Government gives 75 per cent duty-free concessions for minibus operators who transport schoolchildren.
“I have to borrow money to fix the roads because what we collect for vehicles is not enough to fix the roads. But you still want to give more. What is the matter with these people? You think Vincentians are ignorant?” the Prime Minister said.
He stressed that the government has to find EC $30 million (US$11.1 million monthly to pay public sector workers and could not afford the proposals the NDP had put forward.
“So it’s between three to four months’ salary Friday wants to give away,” Gonsalves said. “He ain’t tell you how you got to make it up. So you see teachers, civil servants, police, nurses, doctors, if the NDP in government, at the end every month only some of you going get paid.”
He questioned: “They have any understanding what government is? They want to have chaos in the country, where, by their fiscal measures, civil servants will not be able to get their salaries?”