St. Lucia Simply Beautiful

Value Added Tax (VAT) – An economic imperative for Caribbean islands.

By Cuthbert John

The Government of St. Lucia recently announced the introduction of VAT on September 1, 2012. This announcement did not come as a surprise to most business development watchers in St. Lucia and around the OCES.  St. Lucia remains the only OECS state which has not introduced the VAT and with the pressure mounting from the international financial organizations, it was only a matter of time for the VAT to be introduced here, irrespective of the party in power.

Unlike other islands in the region, St. Lucia is in the best position to properly implement the VAT, since it will have the opportunity to review and learn from the lessons and pitfalls of previous regional governments.

The implementation period is short; only five months, a far departure from the recommended 18- 24 months period recommended by CATAC and other international agencies. Some may be concerned about this short time frame and the possibility of problems which businesses may face as a result of such a short implementation window.

Based on my experience with VAT implementation in the OECS, I am not worried about the short period for implementing the VAT, provided a few things are put in place immediately:

• Adequate funding for the implementation
•  An early and clear decision on the issues regarding the treatment of existing inventories
• An aggressive and coordinated public relations campaign, using well trained staff or a paid PR company. In this regard, all Ministers of Government must become Evangelist for the VAT and should be fully educated on the implementation of the VAT
• The implementation should cross party lines because the VAT implementation is an imperative that any governing party would have had to face.
• The early publication of the VAT white paper and the subsequent release of the draft VAT legislation for public review. Too many countries have waited up to the last minute to publish the VAT legislation and this has created problems with getting buy-in from the public
• Early definition of the package of incentives for the strategic sectors of the economy as they implement the VAT. In this regard, the Government has an opportunity to use the implementation to energize the IT and other sectors of the economy

The rates and the basket of goods to be exempted or zero rated have been well established and it is difficult to see St. Lucia departing radically from the other OECS islands.

VAT is a progressive tax and one aspect of tax reform, and its implementation should be seen as an important ingredient for full OCES economic and political unity. Over the next few months, there will be many debates about the merit and demerits of implementing VAT. The debates would be very passionate and the government should find a mechanism to capture as much of the comments as possible so that they could be taken into account when making the final decisions on aspects of the VAT. Experience have shown that the man in the street has some very interesting ideas about implementing VAT and St. Lucia has the luxury of being the last OECS country to implement the VAT and this is an opportunity that other islands in the region would have loved to have to avoid some of the problems encountered during their implementation.

This is the first in a series of weekly articles to be published by this writer.

About the Author

Cuthbert John is a CARICOM national with more than twenty years of business and project management experience. He began working with VAT in Grenada in 1987 and worked in St. Vincent and St. Kitts during their VAT implementation.

He served as moderator and resource person on several VAT round table discussions aired on Vincentian radio, and hosted several workshops on VAT for businesses, as well as consulting, administrative and accounting support to businesses in St. Vincent and St. Kitts.

Cuthbert holds a Master Degree in Accounting and he is a certified Project Management Professional (PMP) with the Project Management Institute (PMI). He is a Certified Quick Books Pro Advisor for all Quick Books Financial Software and Quick Books Point of Sales Products. He has sat and passed Certifications from Microsoft and CISCO and is a member of the Project Management Institute (PMI) and the International Association for the Advancement of Cost Engineering (AACE). Email: cuthbertjohn@pbmcaribbean.com

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