By Demion McTair. Updated 11:51 a.m., Friday, August 14, 2020, Atlantic Standard Time (GMT-4).
Kingstown, St. Vincent (ONE NEWS SVG) – Contractors in St. Vincent and the Grenadines are now able to benefit from a reduction in the excise tax on heavy vehicles, particularly trucks.
The Government amended the first schedule of the Excise Tax Act by affirmative resolution in Parliament on August 13, and had gazetted the measure on August 11, giving legal effect to a reduction in the excise tax on heavy trucks from 55-percent to 30-percent.
In explaining the amendment, Finance Minister, Camillo Gonsalves said that in the 2020 budget, the government had already put an incentive on the purchase of heavy duty trucks, slashing excise duty from 55-percent to 30-percent, making it cheaper for contractors to import such vehicles.
But, he said the move was part of a number of other measures, including increases in certain fees, which were frozen due to the coronavirus pandemic.
The government’s move to freeze changes in other fees, such as passports, hospital and agriculture fees, inadvertently affected the reduction of the excise tax which was part of the measures related to changes in those fees.
Hence, the government had to separately make the change regarding the reduction of the excise tax for it to take effect.
This is why the first schedule of the Excise Tax Act was amended by affirmative resolution in Parliament on Wednesday (August 13, 2020).
The legality of the reduction
Any reduction in excise taxes must be legal. This includes being gazetted and being subject to, and approved by affirmative resolution in Parliament.
The first schedule of the Excise Tax Act, CAP 430 of the laws of St. Vincent and the Grenadines, prescribes the excise tax rates imposed on exclusable goods.
Section 37 (4) of the act allows the minister of finance, by order published in the gazette and by way of affirmative resolution of the Parliament, amend the first schedule of the Act.
The reason for the reduction
In February 2020, in the budget debate, the Government argued that private contractors needed to expand their capacity.
This came on the backdrop of a reduction from 60-percent to 55-percent in 2019.
But, finance minister, Camillo Gonsalves said that the government had not noticed a corresponding increase in imports of heavy vehicles. Therefore, they thought that the reduction in the excise tax from 60-55 Percent was insufficient.
This lead to a further reduction from 55-30 percent in 2020.
The minister said that heavy equipment, trucks in particular, may be in short supply once the multitude of private and public sector projects come on stream.
In February, the government said it was beseeching local contractors to ramp up their capacity.
As such, it moved to lower the excise tax on heavy vehicles, particularly trucks.