Increase in Customs Service Charge will impose additional burden – Dr Friday

The government’s one per cent increase on the Customs Service Charge will impose an additional burden on Vincentians in an already difficult time.

So says Dr Godwin Friday, the opposition leader, who was speaking on radio this week about the lone tax measure for the 2021 fiscal year.

Finance minister, Camillo Gonsalves announced on February 1 that the government had decided to increase the Customs Service Charge from five to six per cent.

He explained in his 2021 Budget Address that the money earned from this increase will be ring fenced and go directly towards the country’s contribution to regional institutions like the Caribbean Public Health Agency (CARPHA), Pan American Health Organisation (PAHO), Eastern Caribbean Civil Aviation Authority (ECCAA), UWI Seismic Research Centre and Caribbean Institute of Meteorology and Hydrology, among others.

“I think we are the only government in the world that is increasing taxes at a time when people are suffering from COVID-19 and they will say, well alright, is a small increase but it’s not that small. Everything that comes through the port will have to pay an extra percentage point,” Friday said on radio on Monday.

The opposition leader opined that the increase in the Customs Service Charge will lead to all goods in local stores receiving a mark up in prices.

He said he has had conversations with business persons, who said that the increase in the service charge will be passed down to the consumer, particularly if a profit is to be made.

Using an example, Friday reasoned that if the value of goods coming through Vincentian ports is $500 million on a yearly basis, then the Customs Service Surcharge at five per cent amounts to $25 million.

“But if you add the extra percentage point, five per cent to six, now it goes up to $30 million. That additional five million dollars will have to be borne by the consumer. It’s everybody who will have to pay that to the government,” he said.

The president of the New Democratic Party (NDP) accused the government of trying to slide in the increase as though it were a minor change, when it is not the case.

Gonsalves said in the Budget Address on February 1 that the increase is expected to generate $9.6 million this year.

But Friday, while speaking on radio this week, said that the minister of finance provided no explanation as to the value of goods coming into the port, the VAT that will be calculated on the value, inclusive of the service charge increase and the impact it will have overall.

He also suggested that the government is leveraging the help that the country is receiving from the regional institutions in relation to the ongoing effusive volcanic eruption at La Soufriere and the coronavirus pandemic, in the hopes that Vincentians will not mind.

“We know that our obligations to the regional institutions are important yes, but right now, in this current situation, the emphasis has to be on helping the people in the country, not rectifying – in the past, they haven’t been paying…a lot of these fees,” Friday said, while acknowledging what the funds from the service charge increase will be used to finance.

The opposition leader said “the truth of the matter is, it does impose an additional burden on the people of this country at a time when people cannot afford it”.

He also said that the government’s first and foremost focus should be to address the hardship being faced by many Vincentians in these current times.

Friday added that the countries in the region should come together to discuss a collective approach to financing these regional institutions.