Legality of VAT Suspension Questioned
Camilo Gonsalves on Monday while he acknowledged the government’s right to fulfill its promises, he raised several criticisms regarding the nature of the policy and the legality of its execution.
Gonsalves personally characterized the VAT free day as a “gimmick”. He argued that it does not significantly help vulnerable populations but instead benefits individuals with enough disposable income to purchase expensive items like large appliances.
His primary concern was that the implementation was illegal under current law. He explained that the VAT Act is the governing law for taxation and contains no provisions authorizing the cabinet or any individual to simply suspend the law for a day.
The former finance minister asserted that the proper legal procedure would have been to amend the VAT Act in parliament and suggested that the government bypassed this step because it would have been “inconvenient” and would have delayed the event until after the Christmas season.
He emphasized that the “power of the purse to tax resides in the parliament,” not the cabinet. He warned that “legislating from the cabinet” in secret, rather than in the public forum of parliament, sets a dangerous precedent for democracy.
Even though the policy was politically popular, Gonsalves argued that ignoring the law to achieve a desirable outcome was a “bad start” for the new administration and stated that in a mature society, the law must win the “tug of war” against political sentiment, even when the law is inconvenient.
Gonsalves clarified that he was not necessarily attacking the policy itself, but rather the method of implementation, stating that a government must “implement it properly” by adhering to the country’s laws.