Dear Prime Minister,
Honourable Philip J. Pierre
Prime Minister of Saint Lucia
Office of the Prime Minister
Greaham Louisy Administrative Building
The Waterfront
CASTRIES
Re: Unlawful and unjust waiver of 2.5% under the Health and Citizen Security Levy Act granted to Rodney Bay City Center Ltd.
I write to you today to express serious concern over your government’s recent actions in respect of the Health and Citizen Security Levy. On Friday, July 12, 2024, the public became aware via Instrument No.108 of 2024 that the Cabinet of Ministers granted a zero percent levy to the consultants, contractors, sub-contractors and suppliers and utility companies to Rodney Bay City Center Ltd. This selective exemption is both unlawful and unjust.
The Health and Citizen Security Levy Act, which mandates a tax imposition of 2.5% for a period of two years on a wide array of goods and services has had a predicted disastrous effect on our people and economy. Since its introduction it has been riddled with inconsistencies and it has compounded the impact of inflation on households and businesses.
What is concerning for our citizens is that when you passed this Act you expressly stated that the revenue from the levy would be used to bolster our health and security sectors. Regrettably, it thereafter became clear that this was an untruth and that this tax was in fact implemented to comply with terms imposed by the Caribbean Development Bank and World Bank for policy-based loans. So, the tax was passed for revenue recovery purposes and had nothing whatsoever to do with health and security as you had represented.
The United Workers Party, as did others, forewarned you that this levy would exacerbate the economic recovery from Covid, the rampant inflation and negatively impact the economy. By taxing essential goods such as clothing and footwear, furniture, and telecommunications services, the levy was bound to directly impact the public especially the poorest and most vulnerable in our society. You promised that the levy would not impact the cost of food, yet time has proven otherwise, as essential services like transportation and business services were subject to the levy. These additional costs were predictably passed on to the consumer, adding to the financial burden of those already struggling to make ends meet.
Higher costs for essential goods and services reduce disposable incomes, stifle consumer spending, and ultimately deter potential investors who view such policies as an unviable increase in cost. It also severely impacts existing developers and investors who made investments with certain fixed costs and taxes in mind. Your recent proposed exemption of the levy for goods and services to be supplied for the Rodney Bay City Center developer is therefore understood but in fact unlawful and manifestly unfair.
Nowhere in the Act is there a provision that grants Government the authority to selectively exempt goods and service providers from this levy for an ‘approved developer’ as you now seek to do. Rightfully all exemptions or increases should be and must be granted to the benefit of all or none.
When our party was in office, we worked with and supported this developer and were pleased when we learned that this development was due to break ground shortly. However, we do not understand through what legal mechanism you propose to reduce the Heath and Security levy rate to 0% for all consultants, contractors, sub-contractors, suppliers and utility companies providing services to Rodney Bay City Center Ltd. We are, therefore, left to speculate that this special concession is necessary to persuade the developer to proceed with the investment and you now appreciate that the levy is a deterrent to investment.
This selective exemption is not only unlawful as the Act does not provide the enabling provisions for such exemption but equally it is patently unfair to all our citizens. It also raises serious questions as to how Inland Revenue and Customs will be able to legally comply with this Order.
At the time you implemented this ill-timed and ill-conceived Health and Security levy, major concerns were raised by the Opposition and Civil Society. Instead of heeding our advice you arrogantly stated that all St. Lucians should “make the sacrifice”. This decision is an affront to the ordinary St. Lucians who struggle daily to carry this added burden. It is even more egregious that you have not appreciated their sacrifices and have not similarly seen it necessary to provide relief to them.
It is alarming that you can justify the need for this exception for one developer, but despite all the evidence you fail to recognize the even more urgent need for the ordinary citizens, and local businesses and investors. Prime Minister, this blatant inconsistency sends a distressing and unacceptable message that the sacrifices are not to be made by all. We implore you on behalf of all St. Lucians and businesses alike to make an immediate correction to this injustice and instead use your legal authority under the Act to immediately terminate this oppressive levy for everyone.
Yours sincerely,
Allen Chastanet
Leader of the Opposition
