No New Taxes or Job Cuts in Next Budget - April 8, 2002

The Week That Was… No New Taxes or Job Cuts in Next Budget -- but PM warns“ there will be need for belt-tightening…”

by Earl Bousquet

Prime Minister Dr Kenny D. Anthony earlier this week announced there will be no increase in taxes in the next budget, nor will there be any decrease in the number of persons employed by government. But even while more people will be taken off the tax net and Public Servants are assured of job security, the Prime Minister insisted there will have to be some belt-tightening and some reciprocity on the part of Public Service Unions in accepting that some serious belt-tightening will be necessary. The Prime Minister has also expressed concern about the continuing increase in oil prices on the international market and its possible consequences for the government and people of St. Lucia. In a pre-Budget Press Conference Monday, the Prime Minister, who is also Minister of Finance, said he was particularly concerned about the consequences for the government’s continuing subsidy of increases in oil prices to protect consumers. Citing the current spiraling costs of oil, the Prime Minister explained that the average price of oil on the world market was US$19.34 per barrel during the final quarter of last year and by January 2002 it had increased to US$19.49 per barrel. However, the price has since then undergone a substantial increase, standing at US$27.60 on April 2, 2002. Addressing the implications of the increasing spiral in the cost of oil on the world market, the Prime Minister said: “The current trend implies that Government will be left with fewer resources to fund its own projects and programmes -- which, after all, are for public purposes.” He therefore sounded a word of caution, saying: “Substantially subsidizing the price of oil is not sustainable if world oil prices continue to rise significantly.” The Prime Minister on Monday reiterated that position. He said: “Government will continue to monitor the situation closely and will make a determination at the appropriate time regarding the sustainability of the practice of subsidizing the increases in the price of oil at the pump.” It is expected that this matter will gain some attention in the 2002-2003 Budgetary Estimates of Revenue and Expenditure to be presented to parliament later this month by the prime Minister. The Budget Estimates will be tabled in the House of Assembly on Monday, April 29, 2002. This will be followed by the presentation of the Throne Speech by Her Excellency the Governor General on the morning of Tuesday, April 30. Prime Minister Anthony will also present his Budget Address on Tuesday, April 30, while the Budget Debate will take place on May 2nd and 3rd. On Monday, Dr Anthony also welcomed the role of local manufacturers in increasing the island’s exports while reducing imports. That was in response to revelations by the St. Lucia Manufacturers Association (SLMA) that the island’s balance of trade is undergoing a positive change. Late last month, Vice President of the SLMA, Mr Keith Smith, indicated that imports to St. Lucia had dropped significantly from $195.6 million in the year 2000 to $151.2 million in the first nine months (January to September) of 2001. Similarly, exports had more than tripled from $26.1 million in 2000 to a whopping $82.1 million in the first nine months of last year – that is, prior to the September 11 attacks in the USA. Mr Smith told fellow local manufacturers the government’s measures to support the manufacturing sector over the years were beginning to yield positive results. He said while more changes in other areas would take time, the SLMA was however encouraged by the increase in exports from St. Lucia. The Prime Minister, for his part, said on Monday his government was pleased that local manufacturers were making use of government’s incentives, which were now yielding the desired results by way of improvements in St. Lucia’s balance of trade with Caricom and the rest of the world – which needed to be maintained in the post September 11 period. Dr Anthony also this week announced that Government’s formal requests for continuation of subsidies for local manufacturers would be considered by the World Trade Organisation (WTO) at the end of this month. According to the Prime Minister, who is also responsible for Finance and Economic Development, changes in global trade have made it impossible for Caribbean governments to continue offering fiscal incentives for industry. He said the elimination of protection and ongoing efforts to change the way trade is carried out internationally, now makes it necessary for Caribbean governments to have to first seek permission from the WTO for continuation of such incentives as subsidies for manufacturers. The Prime Minister said the current request by OECS territories, including St. Lucia, for continuation of existing subsidies for manufacturers will be considered by the WTO at a meeting scheduled from April 29 to May 1. In developments from the telecommunications sector, the Prime Minister announced on Monday he was satisfied with the recently concluded talks between OECS-ECTEL member-states and Cable & Wireless regarding new telecommunications rates for the five participating territories. He told reporters he couldn’t yet disclose the details, but he was “satisfied with the outcome.” The PM said the government’s were able to secure adjustments to Cable & Wireless proposals and “I believe consumers will also be satisfied with the outcome.” He indicated there was a strong possibility that three new entities will be given licenses for fixed lines while another three would be given licenses for cellular operations. At any rate, he added, there will be more competition, which will benefit the consumer. On the tourism front this past week, the 2002 Jazz Festival got under way with the official launching of Jazz on the Square and announcements regarding Jazz in the South and the line-up for the final shows during the week of main stage performances at Pigeon Point. At the launching of Jazz in the South, Tourist Board Chairman Desmond Skeete said the launching and development of several “fringe” jazz performances will enable the development of a unique local jazz product. In the past week too, the liquidators announced the Hyatt Hotel would be sold to the sandals group, only to be slapped with an injunction later, filed by lawyers for the former owners, who claimed the were not allowed enough time to have another competitor raise the needed funds. Immediately following news of the injunction, Sandals Chairman Gordon “Butch” Stewart visited St. Lucia and, among other things, addressed the press. He explained the benefits being offered by his group for Hyatt – including almost doubling the workforce – and said he was not worried about the injunction. He said he in fact felt “comfortable” about his bid. By the end of the week, the Sandals group seemed to have won the public argument and debate over whether All Inclusive hotels are good for St. Lucia or not. Apart from Mr Stewart’s own explanations on Rick Wayne’s Talk on DBS last Thursday, President of the St. Lucia Hotels & Tourism Association Mrs Berthia Parle issued a separate statement in which she concluded that the criticisms of All Inclusives was unfair and that in fact the Sandals chain’s presence was helpful to St. Lucia’s tourism product by way of hotel occupancy and employment, as well as its spill-off effect in increasing airlift capacity and selling St. Lucia as a Caribbean destination. In still other tourism news, it was also disclosed last week by Rodney Bay Marina that there was a 35% increase in the number of yachts calling at the island’s ports as a result of improved yachting regulations adopted by the government. Marina Manager Cuthbert Didier said this was a direct result of the new regulations passed by government last October, which allows visiting yachts to remain on the island for six months, as against six weeks. Also in the past week: Agriculture Minister Senator Calixte George said farmers had to get ready for some tough decisions necessary to revive the banana industry to its fullest; the new Board of Directors at RSL met with staff to address their concerns; the Ministry of Communications & Works announced new traffic measures to take effect from April 15; the Ministry of Education announced Mrs Fortuna Anthony – a former principal with over 30 years service – was the new Chief Education Officer; the Inland Revenue Department announced an extension of the deadline for income tax returns to April 15; the Attorney General’s Department announced the Criminal Code will come up for review when it’s presented to the next sitting of the House of Assembly; the Ministry of Culture announced the National Cultural Foundation is now operational and had replaced the Department of Culture; the St. Lucia Employers Federation said it was still awaiting the position of the island’s trade unions on the proposed new Labour Code; and the residents of Conway and Barnard Hill said they had launched a Community Development Committee to undertake projects in their area.

April 8, 2002

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