Customs service charge increase is a ‘wicked tax’ – Dr Friday
Lawmakers passed a law in Parliament on Tuesday March 16 that increased the Customs service charge from five per cent to six per cent – an increase that the Opposition has labelled “wicked” and “unconscionable”, in the time of a pandemic.
The one percentage point increase on the Customs service charge is the only revenue measure introduced by the government in the 2021 fiscal year and money raised by the increase is intended to fund several regional entities that play a role in the safety and resilience of this country.
However, Dr Godwin Friday, the opposition leader has argued that the increase in customs service charge will have significant adverse effects and consequences for the people of St Vincent and the Grenadines.
“This is a wicked tax at this time because it will cause great hardship right across the board because it affects everybody,” Friday said in his contribution to the debate in Parliament last week Tuesday.
“So let’s ask the question – and the minister may confirm this when he speaks. He raises, let’s say 8, 10 million dollars from this tax. Where is that money coming from? Who is paying the money?”
The institutions meant to benefit from the increase in the customs service charge include the Caribbean Public Health Agency (CARPHA), the Pan-American Health Organisation (PAHO), the Regional Security Service (RSS), the Caribbean Disaster Emergency Management Agency (CDEMA), the CARICOM Implementing Agency for Crime and Security (IMPACS), the Caribbean Institute of Meteorology and Hydrology, the Caribbean Meteorological Services and the UWI Seismic Research Centre.
While he acknowledged the good intention of the increase, Dr Friday said it was unconscionable to introduce the one percentage increase at this time, as it will affect a wide range of items across the board.
He added that SVG has a small, open economy, meaning that most things used by citizens are imported.
“How can we say to someone, yes we are going to put aside money for the OECS and CARICOM and CARPHA and PAHO- but the money doesn’t come from the sky. Somebody is paying for it and the somebody who is paying for it is the ordinary people in this country, the ordinary people who right now are feeling the pressures being asked to pay more and that increases the hardship upon them,” the opposition leader said.
When he presented the 2021 budget to Parliament in January, Camillo Gonsalves, the Finance Minister said that the government anticipates just over $9 million will be raised from the intervention.
He also indicated that the funds were to be ring fenced so that it will be specifically put aside to make payments to the institutions.
A second piece of legislation, the Automaticity of Payments to Specified Regional Institutions Act (2021) was also successfully passed in the House of Assembly on Tuesday evening.
This Act allows for the automatic payments to be made to the specific institutions.
But Friday pointed out that lawmakers vote to have specific sums of money allocated to the regional institutions every year during the Estimates.
“So what happened to the money? We haven’t been paying? There is no necessary connection between a desire to ensure the automatic payment of these important institutions and raising a tax, a new tax just to pay them. The two things don’t have to go together,” he contended.
The opposition leader gave an overview of the funds allocated to some regional institutions, noting that the OECS, RSS and Eastern Caribbean Supreme Court are principal beneficiaries with sums of $3.1 million, $2 million and $2.2 million respectively.
Organisations like CARPHA and the UWI Seismic Research Centre, which have played an integral role in managing the COVID pandemic and ongoing effusive eruption, account for much smaller amounts — $113,000 and $400,000 respectively.
Friday recommended that if the government wanted to ensure that these institutions are paid but it has no discipline to do it without legislation, then legislation should be passed for the automatic payment of the money that is allocated each year for them in the Estimates from various sources.
“I truly cannot comprehend, other than opportunism, why this measure would be brought to bear on the people of this country at this time, and it is not even intended to raise funds to help those who are worse hit, who have been affected the most by the COVID crisis,” he added.
Dr Friday noted that “it would’ve been strange- to be honest- to tax people, and then tell them you want to give them back money as part of COVID relief. That would’ve been perverse but, in a sense, it might seem on the surface, even more acceptable because we know the intention is to deal with the real pain and problems that the people of this country are feeling at this time”.