One percentage increase on CSC will compound poverty situation locally – PSU

The Public Service Union is calling on the government to defer the one percentage point increase on the Customs Service Charge, so as not to compound the poverty situation locally.

And PSU president, Elroy Boucher is proposing that monies being sought from the increase can be garnered through unpaid taxes owed to the government.

The increase of the Customs Service Charge from five to six per cent was announced on February 1 during finance minister Camillo Gonsalves’ 2021 Budget Address.

Gonsalves said that money earned from the increase will be ring fenced and go directly to 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.

“While the reason put forward by the government for the one per cent increase may be well meaning, and I do believe it is well meaning, it must be noted that the implementation of the same will ultimately translate into a further increase in the price of consumer goods,” Boucher said at a PSU press conference last week.

The Union president noted that food prices are increasing all over the world as a result of the COVID-19 pandemic.

Using an article published in December 2020, Boucher cited that food prices in August 2020 were on average 5 per cent higher than the previous year in the same period.

He also said higher food prices can have a major impact on living standards, which could mean that lower income households could face difficulty amidst rising prices.

Boucher added that a large percentage of SVG’s food supply is imported, therefore an increase in the Customs Service Charge stands to “further exacerbate the price of imported goods”.

He proffered that VAT will also increase in the short to medium term because of the increased value of imported goods, which will result in the higher prices at retail outlets.

“While it may sound like a small increase, the impact will not be small and we are of the view that given the extenuating circumstances, it may be imperative for the government to refrain from increasing the customs service charge until the world is out of its pandemic mode and when the global economy begins to show an economic upturn performance,” he said.

The PSU’s president reasoned that “it will be more prudent to do so when prices for commodities of raw materials on the world market begin to show signs of stability”.

He added that the Union felt it was important for the government to wait until the current global issues had subsided to increase the customs service charge.

It was indicated at last week’s press conference that the PSU has formally written to the government to lodge its suggestion to defer the increase in the Customs Service Charge, which is expected to garner over $9 million for the regional agencies.

Boucher cited this country’s poverty rate as being over 30 per cent and said that even without the increase, it can be expected that the local situation will be made even worse.

“And so, for a government who often speak about the poor, and who have a robust social programme, they should realise the impact of this service charge will be very serious on the poor and on the marginalised. I want to suggest to the minister of finance that these monies they are seeking in the short term, medium term can be gotten from the unpaid taxes that are owed to the government,” he said.

Boucher quoted Gonsalves’ first Budget Address as finance minister in 2018, where it was said that the Inland Revenue Department had been ordered to pursue tax delinquents.

It was disclosed in that year that there was more than $169 million in unpaid taxes.

Only $8 million of that figure was apparently recovered.

The finance minister also said in 2019 that the IRD had completed its preparations to pursue delinquent taxpayers.

However, in his 2020 Budget speech, Gonsalves said that “administrative inertia, intransigence and a stubborn resistance to a culture of more aggressive tax collection have stymied the effectiveness of the Inland Revenue Department. The result has been uneven and unfair burdens being placed on compliant taxpayers and insufficient emphasis on applying the law to the more recalcitrant among us”.

“Why should the public, why should the poor…the not so poor…the challenged public servant, the middle-class person – where this middle class is actually dwindling – why should they pay the price for the Inland Revenue Department, by extension, government not doing its job in recovering over 100 million in taxes?” Boucher said at last week’s press conference.

The PSU’s president said that the recovered funds from unpaid taxes will be more than enough to pay regional organisations what is owed and he again encouraged the government to defer the service charge increase.
He added that it was “highly unfair” to place that burden on members of the public, who were facing financial difficulty as a result of the pandemic.

“Government has been set up to protect its citizens, this is a time when we need protection, financial protection. We know the government is burdened financially but there is a source for what is required and if the inland revenue department is creating the problem, if they are the stumbling block then the public service commission has the authority to do what is right to get the right people there to collect these monies,” Boucher said.

The president also called on the government to inform the public on how much of the $169 million has been paid since 2018 and the outstanding balance.