St Vincent and the Grenadines govt increase taxes in new budget

An EC$1.6 billion budget was presented in the parliament of St Vincent and the Grenadines by the nation’s Finance Minister Camillo Gonsalves on Monday night, simultaneously announcing that there will be a slight increase in various taxes.

He went on to explain the changes that will be made, in accordance with the new budget, so as to meet the requirements of the nation and its public infrastructure and functioning.
Camillo Gonsalves stated that the fees required for the inspection of wiring in buildings will either be doubled or tripled, depending on the kind of building being inspected. This will apply to both commercial and private properties. The needs of wiremen have also been considered and fees have been introduced for their benefit as well.

Citizens will also be charged an additional 25% for acquiring their motor or driver’s licenses, with additional charges on related procedures. Conductor’s licenses will now cost EC$100, as opposed to the earlier price of EC$15.

Prior to the debate regarding the fiscal proposal on Tuesday, Gonsalves had this to say about these alterations, “These measures are designed to adjust user fees and licenses to keep pace with the cost of providing the various associated services and to introduce new user fees where new services have emerged.”

Some changes are relevant for those who travel to and from the country, who will now be subjected to a 37.5% increase in Airport Service Charges, through which the government is aiming to attain an additional EC$6.7 million in revenue this year.

According to Gonsalves, the aforementioned fees were last reviewed and altered in 2016 and the time has come to update them in accordance with the current requirements of the nation. This is being done to ensure that the taxation matches the increased cost of the services being provided.

New Taxation rates for motor vehicles

When these changes become applicable, drivers will be expected to pay EC$125, as opposed to EC$100 for a permit which will be valid for one year. A similar adjustment will also be made to driver’s tests, temporary permits and duplicate licenses and permits.

Citizens will also have the option of acquiring a driver’s license with a 3-year validity, which will cost EC$345 instead of EC$275. A license which is valid for 5 years can also be acquired for a revised fee of EC$535.

A 25% increase has been applied to tutor’s permits which will now cost EC$250. International driver’s licenses will cost EC$200.

A revised charge of EC$190 will apply to changes in vehicle registrations and ownerships, while vehicle inspection costs will be raised from EC$90 to EC$115. A 25% increase will also apply to the charges for motor vehicle licenses.

The revised fee for a private vehicle within the 2000lbs limit will be EC$500, while EC$650 will be charged for vehicles that fall within the 2001lbs to 3000lbs category. Similarly, EC$815 will be charged for any car exceeding the 3000lbs category.

According to the Minister of Finance’s estimates, the revised fees will bring in an additional two million dollars in direct revenue to the government, “In light of the condition of our road networks, the increased traffic on the road and the continuous impact of weather events, Budget 2024 allocates in excess of EC$70 million for road repair and rehabilitation and the construction of new roads.”

Camillo Gonsalves did clarify though, that the revenue collected is not expected to meet the nation’s needs with regards to the maintenance of its road network.

He added “It is expected to contribute to doing so. The new fees make provision for licenses for new categories of goods vehicles to capture the heavier trucks and larger trailers that now traverse roads daily.”

The Minister of Finance is expecting to attain roughly $4.5 million in revenue, which is geared specifically towards heavy trucks and large load carriers which are said to have had an adverse effect on the nation’s roads, since they were not engineered for such heavy vehicles.

New Taxation rates for electrical services

Minister of Finance Camillo Gonsalves highlighted the fact that alterations to the fees for electrical installations and inspections had not been made since 1995, which meant that the changes were long overdue.

With that in mind, he stated the following, “In 2020, the electrical inspector department was restructured and provided with seven additional technical staff including a chief electrical inspector and a deputy electrical inspector, moving the staff complement to 15 up from eight in 2019.”

He added that in the budget for this year, provisions have been made for 18 staff members with an allocation of EC$911,000, which will include $110,000 meant to be utilized for training the staff.

Gonsalves said that the new fee structure should bring an estimated EC$250,000 in additional revenue adding that, “The new fee structure will introduce a small fee for wiremen and increase the fees for electrical inspections for residential and commercial installations.”

New stipulations for Airport Service Charges

It has also been stated that new Airport Service Charges will apply to all flight tickets in and out of the country and the funds accumulated through these means will head directly to the Argyle International Airport. An interesting fact that Camillo Gonsalves spoke of, was that despite the increase in Airport Service Charges, St Vincent and the Grenadines boasts of some of the lowest charges in the region.

Gonsalves added that going by conservative estimates, the number of passengers who are expected to transit through the nation’s air services will generate an additional EC$6.6 million in revenue. These policies will be applicable from the 1st of May, 2024.

Changes to Income Tax Policy

With regards to the nation’s Income Tax Policy, Gonsalves stated the following, “Think about it: between the end of 2022 and today, the beginning of 2024, the government has increased the personal income tax threshold by 25 per cent and removed taxes on an extra EC$5,000 per year of your salary.”

“This is a genuine people-centred benefit for every Vincentian taxpayer. The government will forego approximately EC$6.6 million in revenue as a consequence of this measure.”

This shows a shift in government policies that hark back to the previous year, as St Vincent and the Grenadines has experienced annual standard deductions in income tax for two years in a row.

Gonsalves also announced changes to the National Insurance Service (NIS), which will see a contribution rate of 15%, applicable from June, for the span of the next two years.

This change is meant to ensure that the fund can meet its requirements and function to the best of its abilities till 2060.