Government removes VAT on some items

Government has introduced measures to ease the burden of the controversial Value Added Tax (VAT).{{more}}

The new measures see reduction on the cost of wheat (in essence flour), raw materials and supplies used in the production of animal feed, chicken, electricity for hotels, and agro processing materials.

Prime Minister Gonsalves said wheat will be placed on the schedule of exempt imports with immediate effect.

Similarly, he said the Government will ensure that major raw materials and supplies used in the production of animal feed, corrugated cartons, and other locally produced exempt goods are not subjected to VAT at the point of import.

With regard to chicken, the prime minister announced that with effect from February 1, 2010, all chicken parts and whole chicken will be zero-rated for VAT. The estimated cost of this measure for 2010 is $3 million.

“We expect that all supermarkets and other sellers of chicken would reflect the appropriate reduction in price from February 1 in respect of all supplies of chicken,” said Gonsalves, adding: “including those already in stock.”

The subsidy granted by Government for hoteliers on their electricity bills will extend until December 2010. This is expected to cost the Government $500,000.

There is now an increase relating to fees payable for citizenship, work permits and residence permits by 20 per cent.

Gonsalves said this measure is estimated to raise approximately $300,000 in 2010. However, persons who acquire citizenship through marriage would be exempt from the increase in fees to register as citizens.

The prime minister used the opportunity to ask Vincentians whether the Government should wait for global economic recovery to take action or precede with its strategic plans to jumpstart the economy. Answering his own question, Gonsalves told Vincentians his administration was embarking on the latter course.

With the initiatives being employed, Gonsalves said he is hopeful of further progress in St.Vincent and the Grenadines in 2010 despite the continuing challenges.

He stressed that a less resolute government would have seen “the economy and society go asunder.”

Gonsalves explained that it is important that the local economy is stimulated because even though financial markets have rebounded, economic recovery is likely to be slow.

He used the opportunity to remind Vincentians of several tax reductions that his government has made. (HN)