Minister of Finance Camillo Gonsalves has announced the introduction of a Climate Resilience Levy to be paid by all stay over visitors in hotels, apartments and short- term rentals.
This levy of EC$8 per night will take effect from May 1, 2018 and forms part of the government’s new fiscal measures.
It comes as part of the government’s thrust to increase the source of revenue dedicated to respond to issues of climate change.
In 2017, a Contingency Fund was first established and a levy on consumption was imposed by increasing the Value Added Tax (VAT) rate by 1% to provide a dedicated source of revenue to capitalize it.
Speaking in Parliament yesterday during the Presentation of the 2018 Budget, Minister of Finance, Camillo Gonsalves said that over the 8 months of operation since its introduction in 2017, the levy capitalized the fund to the sum of $6.75 million.
He said “St. Vincent and the Grenadines has been affected by several disasters over the past years and given the country’s vulnerability to increasingly intense adverse weather events and the fiscals risk they pose, these International organizations have urged the Government to seek out additional means to increase the inflows to the Contingencies Fund.”
Minister Gonsalves said the expected revenue from this measure is estimated at $1.7million.
Meanwhile, the Finance Minister also announced that the kilo watt hour (kWh) threshold for Value Added Tax (VAT) on electricity will be reduced from 200kWh to 150kWh with effect from May 1, 2018.
Minister Gonsalves said, “This means that, all VINLEC domestic customers who consume 150 units or more monthly will be required to pay VAT.”
“With the lowering of the VAT threshold to 150 units or more, just 36.0 % of VINLEC’S domestic customers will now pay VAT.”
He added that, “St. Vincent and the Grenadines is one of few CARICOM countries where VAT is not paid by domestic customers consuming 200 units (kWh) of electricity or less.”
He further opined, “That as consumers continue to implement more energy efficient measures in their households the level of electricity consumption would decline thus reducing the number of domestic customers who will fall within the VAT threshold.”
The introduction of VAT on Electricity is expected to provide an estimated $1.0 million in additional revenue annually to the government.