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PM Cautions, "Belt Tightening Required"

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Contact: Primus Hutchinson

Monday, April 08, 2002 - Prime Minister Honourable Dr. Kenny Anthony has reiterated the need for belt tightening in light of the recent down turn in the local and international economy. However, the Prime Minister says everything will be done to maintain employment levels while the government maintains its policy on reducing personal income tax.

Speaking during a press conference Monday, Dr. Anthony explained that while this may not be used as a yard stick to measure the performance of the local economy, there have been some positive signs in the tourism sector with some hotels employing additional staff, while certain businesses are undertaking some expansion.

Notwithstanding the slow pace of the economy, the Prime Minister stated, this year’s budget will see another reduction in personal income tax. “As a matter of fact, you will know that we increased the tax threshold to twelve thousand dollars last year which enabled hundreds of St. Lucians to be emancipated from the payment of direct taxes. This year that is expected to increase to fourteen thousand dollars and that benefits everybody. We are on track as far as that is concerned and I do not intend to reverse that,” the Prime Minister promised.

Dr. Anthony told the media that the last financial year saw a 120-million-dollar shortfall in revenue from the tourism sector alone. Coupled with the shortfall in banana production as a result of a severe drought – the worst in forty years – and the loss of consumption taxes in the effort to keep fuel prices steady, the government’s revenue collection was far short of its projections. But, the Prime Minister said, he believed that the economy had seen the worst and, barring any other unforeseen circumstances, was on its way to recovery. He cautioned, however, that it was going to be a “slow” and “painful” climb.

One area of immediate concern, Dr. Anthony pointed to, was the increases in fuel prices on the international market. Oil prices moved from US$19.49 per barrel in January this year to US$27.60 per barrel at the start of April, he said. If the trend continues, the Prime Minister cautioned, the Government of Saint Lucia could not continue to absorb the losses in revenue although the government has not made a firm decision in that regard, “because we think that the situation is still fluid.”

Adding that every effort will be made to ensure that “ordinary St. Lucians” do not bear the brunt of the burden, the Prime Minister warned, “...there will be some belt tightening, but the government’s policy of reducing direct taxation will continue.”

“But some adjustments may have to be made in some other sectors. I will be very frank with you. I think we should expect announcements regarding the Used Car Sector, because there are horrendous problems where that sector is concerned - massive problems of under invoicing - and the government has reached the point where it cannot continue to tolerate what is happening in that sector. Some adjustments will be necessary,” the Prime Minister ended, giving a small indication of what the 2002/03 budget might bring.


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