PM announces new taxes, predicts slow economic growth

By Admin Wednesday January 16 2013 in Caribbean
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KINGSTOWN: Prime Minister Dr. Ralph Gonsalves has presented Parliament with a EC$799.1 million (US$296.5 million) national budget outlining increased taxes and predicting slow economic growth for St. Vincent & the Grenadines in 2013.

 

Last month, the government presented Parliament with the estimates of the fiscal package that showed a marginal increase on last year’s figures and comprise recurrent expenditure of EC$622.2 million and capital expenditure of EC$176.8 million.

 

In his presentation on Monday evening, Dr. Gonsalves said that the country is expecting economic growth in spite of the on-going global economic crisis.

 

“St. Vincent & the Grenadines is showing tentative signs of a slow recovery after three years of negative growth, 2008, 2009 and 2010 inclusive,” said Gonsalves. “In 2011 real gross domestic product grew by 0.4 per cent and in 2012 real economic growth is estimated at 1.53 per cent. For 2013, real growth of 1.5 per cent is projected and at least a four per cent real growth is also projected by our government in the midterm, slightly in excess of the IMF (International Monetary Fund) projection of just over three per cent.”

 

He told legislators there is need to do better “even in the midst of the global economic uncertainties”.

 

Gonsalves said the economic situation has not only affected St. Vincent & the Grenadines but all member states of the Eastern Caribbean Currency Union (ECCU).

 

“In the case of our country and the rest of the Currency Union, the collapse of the regional financial company, CL Financial and the demise of the subsidiary insurance entities, CLICO International Limited and British American Insurance Company (BAICO) have caused immense economic dislocation, loss and damage that can’t be swept aside,” he said.

 

Gonsalves said that the aggregate exposure of liabilities from CLICO and BAICO within the ECCU amounted to nearly two billion EC dollars, adding that for his country alone, the liabilities were in excess of EC$375 million or 17 per cent of Gross Domestic Product (GDP).

 

Speaking on the budget theme, “Building a Sustainable Resilience Economy in Challenging Times”, Gonsalves said that financing of the budget presents a challenge for his administration and praised a number of governments and regional and international institutions, including the European Union, for providing grants or concessionary loans to the country.

 

He said concessionary loans will come from China, Venezuela, the Caribbean Development Bank and the World Bank.

 

“All the preliminary work for accessing these grants and loan funds has been completed and the way is clear for the timely drawdown of the funds,” said Gonsalves.

 

Gonsalves also outlined some new tax measures including duty on alcoholic beverages.

 

He said that while the rate of tax on local “strong rum” will not be included in the new taxes, the increase is necessary in order to assist the government fund the nation’s annual Carnival celebrations.

 

“This annual cost now exceeds EC2.7 million with EC$1.2 million contributed by the national lottery and an additional EC$1.5million by the central government,” said Gonsalves.

 

The Prime Minister said there will be higher charges for High Court register fees.

 

“In 2011, the government made some modest increases to the fees charged by the High Court Registry for the registration of documents,” said Gonsalves. “The fees collected from the department, however, covered only a small percentage of the costs of operating this important department. Accordingly, I propose to further increase registry fees with effect from March 1, 2013.”

 

Gonsalves said the new measure would result in an additional EC$420,000 in revenue to government and there would also be increased fees for immigration services, including citizenship, residence and renunciations.

 

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