PM: Ease in taxes coming next year
October 19, 2007

PM: Ease in taxes coming next year

As the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Central Bank (ECCB) looks into skyrocketing prices, this country’s Prime Minister Dr Ralph Gonsalves has promised a hike in salaries, and an ease in taxes for the coming year.{{more}}

Speaking at a press conference on his return from the 60th meeting of the ECCB Monetary Council, in St Kitts and Nevis last Friday, October 12th, Dr Gonsalves said that a wage increase is coming, and assured journalists that the government can afford the pending increases.

“We have been having fairly robust economic growth at this time, so the state can in fact afford some measure of wage increase and for the reclassification,” Dr Gonsalves said.

St Vincent and the Grenadines is estimated to see a growth rate of about 6.5 percent this year, adding to a pleasing level of growth rate over the last four years, Dr. Gonsalves said.

In 2004 the rate was 6.8 percent, followed by 2.6 percent in 2005, and 6.8 percent in 2006, “which in any language is excellent growth rate,” Dr Gonsalves stated.

He however noted that the area of productivity still needs to be addressed, so that a greater volume of food can be produced.

Addressing the problem of inflation however, Dr Gonsalves emphasized the ECCB’s position that the pressures of rising prices is mainly due to external shocks, including the rising price of oil and imported food items, as well as the falling value of the US dollar.

“Cognisant of the critical implications of high and rising prices to standards of living, Council mandated the establishment of a working group comprising officials of relevant ministries at the national level, the OECS and the ECCB, to further investigate the matter,” the communiqué of the meeting says.

This working group is to make urgent recommendations for short and medium term measures to address the issue.

Dr Gonsalves reported that Domestic credit within the Monetary Union expanded by 20.3 percent to $9.1 billion during the twelve months ended June 2007, compared with 16 percent growth recorded during the corresponding period of 2006.

The banking system also saw an expansion in deposits during the period in question.

“Consistent with the general buoyancy in economic conditions, total deposits grew by 11.8 percent to $15 billion…compared with an increase of 9 percent over the corresponding period of 2006.”

The report credits significant foreign direct investment inflows, expansion in construction and agriculture and favourable performances in wholesale and retail trade, for this level of growth.

The Prime Minister said that the Council again noted that the downward trend in the real effective exchange rates, mirroring the slide of the US dollar (to which the EC dollar is pegged), against major world currencies, would in fact enhance the attractiveness of the region as a tourist destination. (KJ)