CASTRIES: The St. Lucia Employers Federation (SLEF) is calling on the government to lower the near one-year-old Value Added Tax (VAT) to provide relief to local businesses in the face of job losses and business closures.
“This reduction will provide members some breathing space as the slowdown in the economy continues to bite deep into their cash flows,” said SLEF executive director, Joseph Alexander.
The private sector group wants the VAT reduced from 15 to 10 per cent. According to Alexander, should the government decide against collecting the 15 per cent VAT up front from businesses and collect the tax after they have sold their goods, employers would obtain much needed relief in the current economic downturn.
Explaining the plight of some businesses in St. Lucia, Alexander advised that most operate via an overdraft system which they have to maintain.
“Therefore having to pay the 15 per cent VAT before goods have been sold plus taking care of their overdraft all at the same time impacts severely on the cash flow of businesses which become yet another reason for job losses and the closure of businesses,” he said.
Alexander said that VAT is one of several reasons why some businesses were going through tough times. He listed the slowing down of the economy as another and said the Dr. Kenny Anthony government should have set the VAT ceiling at 10 per cent and increase it as the economic situation improves.
“If things were booming it would not be that difficult,” said Alexander. “The 15 per cent is just too high in these harsh economic times.”
The VAT went into effect on October 1 last year after the government agreed to a one-month extension of the fiscal measure.
The comments from the employer federation on the closure of businesses and job losses here is the second in days, with the National Workers Union (NWU), one of the nation’s major trade unions, expressing concern over the country’s failure to grasp timely opportunities to structure a plan aimed at job security and economic stabilization.