Controversial 2.5% Health And Security Levy In Saint Lucia Sparks Debate

Public Outcry Grows Over Health and Security Levy in Saint Lucia Amid Claims of Unfair Exemptions

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Opposition Leader Allen Chastanet Criticizes Prime Minister Philip J. Pierre Over Alleged Unlawful Exemption

Castries, Saint Lucia – In a recent development, the Leader of the Opposition, Allen Chastanet, has penned an open letter to Prime Minister Philip J. Pierre, expressing severe concerns regarding the selective exemption of the 2.5% Health and Security Levy granted to Rodney Bay City Center Ltd. Chastanet’s letter, dated July 17, 2024, calls into question the legality and fairness of the government’s decision, which he deems both “unlawful and unjust.”

The 2.5% Health and Security Levy in Saint Lucia, implemented to generate revenue purportedly for the health and security sectors, has been a contentious issue since its introduction. Critics argue that the levy has exacerbated economic hardship, particularly for the most vulnerable segments of society, by increasing the cost of essential goods and services.

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Key Points from the Open Letter

Allen Chastanet’s open letter outlines several critical points:

Allegation of Unlawful Exemption: Chastanet asserts that the government’s decision to grant a zero percent levy to the consultants, contractors, subcontractors, suppliers, and utility companies associated with Rodney Bay City Center Ltd. is unlawful. He emphasizes that the Health and Security Levy Act does not provide the authority for such selective exemptions.
Economic Impact: The letter highlights the negative economic impact of the levy, arguing that it has compounded the effects of inflation and hindered economic recovery post-COVID-19. The levy, applied to essential goods such as clothing, footwear, furniture, and telecommunications services, has reportedly increased the financial burden on consumers and deterred potential investors.
Misrepresentation of Levy’s Purpose: Chastanet accuses the government of misleading the public regarding the levy’s purpose. He claims that while the levy was presented as a means to bolster health and security sectors, it was actually implemented to meet the conditions imposed by the Caribbean Development Bank and World Bank for policy-based loans.
Call for Equal Treatment: The opposition leader calls for equal treatment for all citizens, arguing that the selective exemption for Rodney Bay City Center Ltd. is unfair to other businesses and individuals who have had to bear the additional tax burden. He urges the Prime Minister to terminate the levy for everyone, not just a select few.

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Full Text of the Open Letter

17th July, 2024

Honourable Philip J. Pierre

Prime Minister of Saint Lucia

Office of the Prime Minister

Greaham Louisy Administrative Building

The Waterfront CASTRIES

Dear Prime Minister,

Subject: Unlawful and unjust waiver of the 2.5% under the Health and Security 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 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, suppliers, and utility companies to Rodney Bay City Center Ltd. This selective exemption is both unlawful and unjust.

The Health and 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 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