HOME	SEPTEMBER 04th, 2004

SEPT 04

Based on the action plan drawn up for the implementation of the Value Added Tax (VAT) system, the team established by government to set things in motion is reporting tremendous progress to date.

The timetable for implementing the tax structure has been revised and all seems set for VAT to be reintroduced in January 2006.

VAT Legislation is to be passed by the end of the first quarter of 2005, so that the full-fledged public education and awareness strategy on the tax system can take place.

In the 2004 Budget, the Government had indicated its desire to implement the system in harmony with other OECS territories, due to the understanding that there was a need for a revised tax structure in the smaller islands.

Consideration was given to the fact that they ought to prepare for any effects that may come with globalization and the opening up of trade barriers.

"The process of trade liberalization means lower and fewer import duties with the ultimate aim being to eliminate them altogether. This process will lead to an eventual loss of Government revenue from custom duties and taxes thus undermining Government's fiscal regime", said Finance Minister Anthony Boatswain.

"In 2003, $ 175 million or 53% of Government's revenue came from customs duties and taxes. Clearly, the process of liberalization necessitates appropriate and timely fiscal adjustment, if government is to remain viable and provide the current level of services required by the citizens of this country", he noted in presenting the 2004 Budget in February.

The Grenada Value Added Tax Implementation Team has since sought to review all its objectives, with four months of its work already complete. It has been in regular consultation with the OECS Tax Commission, which is spearheaded by Grenadian-born economist, Sir Allister McIntyre.

Several workshops and training sessions have been held in preparing the local team to go about its work, most of which dealt with policy issues, the reviewing of draft Legislation and developing models to assess the impact of VAT on household expenditure, among other things.

As a consequence of the recommendations made so far, the Grenada Cabinet has approved the establishment of a VAT Steering Committee, which will be chaired by the Minister of Finance, with the Minister of Revenue Administration as Deputy Chairman.

Letters have been sent out to the Trade Union Council, the Opposition and the Grenada Chamber of Industry and Commerce, requesting that they name a nominee to the Committee. A VAT Technical Committee comprising the Heads of Department of the Ministry of Finance and Audit Departments was also established. The Permanent Secretary in the Ministry of Finance is the Chairman.

The Grenada VAT Implementation Team will, from time to time, review their plans and activities to ensure that they are consistent with the stated goals and objectives of government.