The Leader of the Opposition, Ralph Gonsalves, on Tuesday, made several critical points regarding VAT reduction, one of the NDP’s 60-day campaign promises.
Gonsalves said the NDP government is “backing away” from its election promise to reduce the Value Added Tax (VAT) from 16% to 13% within its first 60 days in office.
“Instead of an immediate reduction, the government has decided to study the matter and report back before the end of the year”.
The Opposition leader stated that reducing VAT at the port and domestically would cost the treasury approximately $60 million.
He warned that because “money is fungible,” losing this revenue would force the government to impose new taxes elsewhere, likely on income or productive capacity rather than consumption, to make up the shortfall.
Gonsalves characterised the government’s “VAT-free day” as a “gimmick” that provided little real relief to working people.
He questioned the government’s claim that the day generated $28 million in turnover, arguing that this figure was mathematically improbable given that the daily GDP average is around $9 million.
Gonsalves compared it to Barbados, a much larger economy, which typically sees significantly lower turnover on similar days.
He noted that the domestic VAT relief was limited by various restrictions, excluding items such as vehicles, hire purchase agreements, restaurants, and hotels.