In a firm rebuttal to recent international recommendations, Ralph Gonsalves, leader of the Unity Labour Party (ULP), has voiced strong opposition to a proposal by the International Monetary Fund (IMF) to increase the Value Added Tax (VAT) on the tourism sector.
While the New Democratic Party (NDP) had campaigned on a promise to lower the standard VAT rate from 16% to 13%, Gonsalves noted that the IMF mission head, Sergei Antoshin, recently dismissed that idea, stating there is “no room” to lower the rate. Instead, the IMF suggested that the special VAT rate for tourism—currently set at 11% for hotel rooms and restaurants—should be brought in line with the standard 16% rate.
Gonsalves was emphatic in his rejection of this recommendation, stating, “We don’t agree with [the IMF] that you must increase the taxation on hotels and restaurants. Don’t agree with that at all”. He argued that such a move would be counterproductive at a time when the nation’s tourism industry is finally “taking off”.
The ULP leader explained that maintaining a lower tax rate is a strategic choice intended to keep the local tourism product competitive on the global market. He asserted that the government must use “different levers” to support the industry rather than burdening it with higher costs that could drive visitors elsewhere.
Gonsalves warned that if the NDP government follows through with this IMF advice, it would place immense pressure on hoteliers and restaurant owners. He cautioned that these businesses, many of which supported the current administration, would be the first to feel the sting of what he calls an “austerity program” that prioritizes balancing books over economic growth.
He said the tax hike is part of a broader “wrong and dangerous” economic strategy, Gonsalves argued that the IMF’s focus on fiscal consolidation ignores the need for public investment and inclusive growth. He maintained that increasing taxes on a vital sector like tourism would harm the middle class and the nation’s overall development, describing the proposal as “bitter medicine” that the public should reject.
Gonsalves urge citizens to stay alert to these policy directions, suggesting that the ULP’s alternative approach of “prudence and enterprise” is the only way to facilitate growth without stifling the country’s most promising industries.
stvincenttimes.com
