New fiscal incentives for Tourism, Manufacturing

In an effort to build on the positive achievements of Tourism and Manufacturing in 2011, fiscal incentives for these sectors were announced by the Prime Minister during the Budget address yesterday.{{more}}

Prime Minister and Minister of Finance Dr Ralph Gonsalves said last year, tourism in particular showed positive performance in the stay-over category and is estimated to have grown by 18.7%. The manufacturing sector he said, has also performed creditably, with a growth of 6.5% estimated for that sector.

He, therefore, announced that duty free concessions will be granted to manufacturers, on all raw materials, plant and equipment imported for use in their operations.

“The import duty on raw materials for those operations imposes an extra cost and causes our businesses to be less competitive on both the local and external markets. Further, the tax on raw materials leads to cascading…,” he explained.

In order to access this facility, manufacturers will be required to make a formal application through the Ministry of Industry and all conditions in the Fiscal Incentives Act will apply to this program.

Additionally, relief in the cost of electricity for commercial and industrial consumers was announced.

“The high cost of electricity has been identified as one of the major impediments to business development in St Vincent and the Grenadines. Indeed, electricity cost in St Vincent and the Grenadines is higher than for most of our trading partners, and thus puts producers at a competitive disadvantage with the rest of the region,” Gonsalves stated.

In an effort to address this impediment, effective March 2012, the basic charge for industrial consumers will be reduced from the current 45 cents per kwh to 42 cents per kwh.

“This measure is estimated to cost $250,000 per annum, most of which will be borne by VINLEC. The direct cost to the Consolidated Fund in the form of a reduction in VAT revenue will be minimal,” he said.

The Prime Minister also announced that a volume discount system will be instituted for commercial and industrial consumers.

Industrial consumers using more than 150,000 units per month will be entitled to a five per cent discount and those consuming over 200,000, a ten per cent discount. A five per cent discount will also apply to commercial consumers utilizing more than 150,000 units monthly.