This recommendation garnered the support of the Opposition Senators, who said they are in support of a VAT increase. The United Workers’ Party is popular for their decrease of the VAT rate from 15% to 12.5%, after promising a total removal during their election campaign.
“I wish to propose to the government to increase the VAT rate to 15% and remove the health and citizen security levy. I know it does not sound popular on the face of it, but the impact of an increase in VAT is going to be less than the impact of the 2.5% directly,” the Independent Senator proposed.
The Senator says the current model of VAT is understood by businesses and consumers alike. Implementing a new tax, he says, will cause too much disruption to the order to business on-island. “The system works, people understand it. The difficulty with the [health and citizen security] requires a different set of administration, reporting, and regulation. The reduction in VAT for sanitary napkins and other feminine supplies has not been felt in the economy because it’s not being passed on. The requirement that consumer affairs inspectors have to go and inspect it.. imposes another financial requirement on the government.”
Opposition Senator, Nancy Charles, announced her party’s preference for an increase to VAT, as opposed to the new levy. “I support your recommendation because an increase in VAT back to 15% would be much cheaper than that same item if the health and security levy was applied. It works out to be cheaper for the item.”
The move by the former administration to decrease VAT to 12.5% reportedly incurred a loss of over EC $50 million for the government. The UWP has notoriously been known for criticising the SLP for their introduction of Value Added Tax as a means of revenue generation and has vehemently opposed the introduction of a new tax, the Health and Security Levy. However UWP, has been unable to find a suitable alternative to the current tax regime.