November 3, 2006

PM tells merchants to show their creativity

Prime Minister Ralph Gonsalves believes that innovative merchants will find ways to avoid paying double tax on items that remain in their hands at the initiation of the Value Added Tax (VAT) system.

Responding to concerns that were raised in Parliament Prime Minister Gonsalves said that merchants will be able to take advantage of the bonding system for goods that was put in place to deal with this potential problem. So at the time when VAT is coming in and goods are ordered merchants will not have to clear all their goods but only what they reasonably think will be sold before the May 1, 2007 VAT date. Only those goods cleared will attract the consumption tax. The goods bonded will only attract the VAT when they are cleared after the VAT implementation date.{{more}}

He was speaking in Parliament during debate on the Transitional Provisions and Consequential Amendments Bill which repeals a range of existing taxes.

The concern raised was that even though a merchant estimates what would be sold some may be left back and VAT will have to be charged on those items on May 1, 2007 even though the consumption taxes were already paid.

Writing off this concern as a simple happenstance of the new system Prime Minister Gonsalves said that it is not as a result of any fault in the implementation of VAT by the Government.

“When the leader of the opposition speaks he speaks as though it is the way it is implemented but it is really a happenstance that inevitably accompanies the introduction of VAT,” said Gonsalves.

He said that in other countries where VAT was implemented they faced the same challenges and merchants had to be innovative and offer specials on the remaining stock before the VAT date.

“Mark my words, those Vincentian merchants who are allowing others to lull them into a false sense of dread about May 1, wait until you see some people who originate from outside of St Vincent and the Grenadines and who have stores especially with clothes and apparel in town you will see the sales they will put on to attract people and they will leave a lot of less creative merchants in the back,” Gonsalves said.