Dominica’s finance minister has stated categorically, that the government does not intend to increase the existing 15 per cent value added tax – VAT.

Prime Minister Roosevelt Skerrit, in his capacity as finance minister, made that clear in a radio appearance earlier Tuesday (July 10 2012).

“Do not expect (in the July 17 budget) an increase in the rate of VAT in Dominica,” he said.

“What I maintain, in small islands like ours, you cannot go beyond 15 per cent VAT.  And this is why this government will never increase the rate of VAT in Dominica,” the prime minister explained on Kairi FM’s Heng programme.

He also indicated there, that the VAT was also very unlikely to be reduced any time soon.

“In a small economy like ours, anything that is less or higher than 15 per cent is not going to be good for the economy,” PM Skerrit said of the controversial tax.

Speaking at an earlier function in the Bense area to launch a new water project in that district, the  Prime Minister rejected as “not sound advice at this time” suggestions by the opposition for the removal of the Value added tax.

“I hear today of people who say they love Dominica talking about all sort of nonsense about what the Government should do or should not do in this upcoming budget. People talk about removing VAT altogether but with no alternative suggestions,” PM Skerrit said.

”You remove VAT then what do you replace VAT with? How is Government going to pay public officers and to help maintain goods and services” the prime minister queried.

He defended the 2006 introduce of the tax as one that was necessary, and pointed out that because of the global financial crisis several countries around the world have had to increase taxes, including the VAT.

“What we have seen in other countries is that not only have they maintained the VAT legislation, they have increased the VAT.  In the United Kingdom for example the VAT there is 20 per cent, in Barbados it was increased to 17.5 per cent.

The VAT was officially introduced in Dominica in March of 2006 and is being described as a significant revenue earner for the Government.

It replaced the consumption tax of twenty percent (20%) on most goods, the sales tax of seven point five percent (7.5%) on all goods, the hotel occupancy tax of five percent (5%) and the entertainment tax.

The VAT was imposed at a general rate of fifteen percent (15%). A reduced rate of ten percent (10%) was also applied to hotel accommodation.

Additional information supplied by GIS.