Search

External vulnerabilities and a weak global environment, particularly from weaker tourism demand combined with domestic supply shocks contributed in part to the sluggish performance. Natural disasters, as in the case of Hurricane Tomas in 2010 and a major outbreak of a banana leaf disease posed serious challenges towards greater output growth. (…)

(…) Agriculture's GDP contribution remained modest during the review period, partly due to the adverse effects of natural disasters, plant pests, and rising input prices. (…)

(…) The challenges of climate change, external shocks, high debt to GDP ratios, inflationary pressures and volatile food prices are real and have all contributed to an extended period of economic pressure. Consequently, it is Saint Lucia's view that the multilateral trading system must focus on a more equitable framework for trade and greater sensitivity for the circumstances of SVEs.

The Government's short-term reform programme also envisages a number of measures to reinforce the institutional framework and enhance competitiveness, such as: establishing a specialized court for commercial disputes; creating an energy sector regulator and paving the way for commercial entry of renewable energy producers; implementing information technology solutions for fully transactional online presence of the public administration and monitoring of government vehicles; and a better targeted social safety net.

Table 3.1 Tax revenue by main sources, 2007-12
(EC$ million and %)
2007 2008 2009 2010 2011 2012
Environmental levy 3.0 2.3 2.0 2.2 2.1 1.6

St. Lucia introduced value added tax (VAT) in October 2012, to replace five indirect taxes: consumption tax, environmental protection levy, motor vehicle rental fee, mobile telephone tax, and hotel accommodation tax. VAT registration with the Inland Revenue Department is compulsory for businesses with annual gross turnover reaching the EC$180,000 threshold. VAT is charged at a general rate of 15% on the supply of services and goods, including imports. A reduced rate of 8% applies, until April 2014, to accommodation services supplied by a hotel, and to food and beverages supplied by a restaurant; thereafter the rate will increase to 9.5%.

(…) Zero-rated [VAT] supplies of goods and services include live animals (other than pets); fuel; fresh eggs; uncooked pasta; ventilated boxes for transport of unprocessed agricultural products; water and sewerage; electrical energy; and all exports. A range of goods and services are VAT-exempt, including financial services; medical services; care services to children and aged or disabled persons; veterinary services (other than for pets); education services and materials; postal services supplied by the State; agricultural and fishing inputs; and numerous food items. (…)

A range of agricultural inputs are VAT-exempt, while certain inputs and unprocessed agricultural produce are zero-rated (section 3.1.3). Additional incentives to the agriculture sector generally take the form of partial or complete waivers of import duties, and excise taxes on most items used in production and processing of agricultural commodities (e.g. improved plant and livestock varieties, pick-up and refrigerated trucks, tractors, fertilizers, agri-chemicals, medication, safety gear, land preparation tools and equipment, and fishing vessels and equipment). The fisheries subsector is also eligible for a fuel rebate of EC$0.75/gallon for the first 4,500 gallons. (…)

(…) Other support measures include in-kind government contributions for: maintenance of private access roads (up to 50% of materials and technical services), pest and disease control (up to 100% of supplies and labour), as well as irrigation and processing systems, soil and water conservation, and renewable energy installations (up to 50% of technical expertise). Applications for incentives must be accompanied by a business plan that demonstrates the project's viability; those with estimated support value not exceeding EC$100,000 are decided at the Ministry level, whereas requests above that threshold require approval by the Cabinet. No estimates of forgone revenue and provided in-kind support were available for 2007-13.

No new export restrictions or bans have been introduced since 2007. Export-licensing requirements remain in place for, inter alia: narcotics and drugs; ginger and dry coconut, and rare or threatened plants and animals. Licences for ginger, dry coconut, and exports requiring a CITES permit are administered by the MAFFRD, which also issues export permits for fish and seafood, conditional on provision of the relevant health certificate. Seasonal export bans on lobster are notified annually by publication in the media; a moratorium on sea eggs fishing (and exportation) remains in place.