By Caribbean News Global

CASTRIES, St Lucia – Addressing Saint Lucia Labour Party (SLP) supporters in Soufriere last Wednesday, Prime Minister Philip J. Pierre pledged a VAT-Free day in December 2025, the first of its kind in Saint Lucia’s history.

The announcement has expeditiously disrupted the United Workers Party (UWP), disintegrating into a regressive economic module and policies where tax revenue and the national financial burden are more heavily directed to lower-income families and individuals.

“ When things work out well,” there will be a VAT-Free day in December 2025.” Prime Minister Pierre said. “Pensioners will receive XCD 600, and civil servants’ bonus payments will be paid in December 2025.” Government will pay five CXC subjects for Saint Lucian students,” and “we will double the allotment to the youth economy.”  

The provisional VAT-Free day qualifies as a relief to ALL consumers (the opposition UWP included) to counter inflationary pressures, keep money directly in the pockets of consumers, and provide the much-needed extra help to buy what most working families need.

While the announcement has captured the responsiveness of many, the VAT-Free day in December 2025, on purchases as an individual or in a business-to-business transaction, will require administrative guidance from parliament, and on qualifying goods and services listed throughout the supply chain.

Prime Minister Pierre’s VAT-Free day in December 2025, “ When things work out well,” also qualifies as a rebate for all Saint Lucians, making life easier to enjoy the Christmas season, buying gifts and sharing with family and friends. The VAT-Free day in December 2025 is also viewed as a “tax holiday” at a time when family expenses are at their highest.

Consequently, reducing costs on groceries and seasonal expenses, helping to celebrate, will help keep a little extra money in many working families’ bank accounts.

Prime Minister Pierre is consistent in stating that his administration is focused on making life more affordable, helping families regardless of their circumstances to keep up with the cost of living and out of poverty.

Tax reform

On assuming office in 2021, the Pierre administration implemented its transformative tax reform:

• The removal of withholding tax on government contracts valued at $10,000 or less, helping small contractors and entrepreneurs grow;
• Income tax threshold raised from $18,000 to $25,500 annually, meaning over 14,000 Saint Lucians now pay no income tax at all;
• Suspension of VAT on key building materials, gym equipment for sports groups, and radiology equipment, making construction, health, and wellness more accessible;
• Removal of VAT on 70 essential food items and women’s sanitary products, putting more savings directly into households;
• Extension of VAT amnesty on fines and penalties for outstanding taxes dating back to 2001, giving businesses and individuals a fair chance to get back on track. The deadline was extended to May 1, 2026;
• Continued suspension of House and Land Tax on residential properties, a direct relief for homeowners.
• All pension income is tax-free, effective January 1, 2025;
• A six percent service charge was also removed from 24 price-controlled food items, effective June 1, 2025;
• Businesses investing in cybersecurity, AI tools, or ICT staff training can claim up to $50,000 as a tax-deductible expense.

UWP fighting against VAT-Free Holiday

The UWP, while stating their schematic to governance, says, “raising the quality of living, isn’t just our promise; it’s our plan,” however, formulates absurdity, emphasising, “the difference between the SLP and the UWP approaches to easing the financial burden on Saint Lucians couldn’t be clearer.”

The UWP’s immediate response to tax breaks and benefits for the people of Saint Lucia, in summary, articulates that the VAT-free day is bad policy.

“The SLP’s proposal of a VAT-free day is a short-term gimmick that might save consumers around $1 million for a single day of spending, barely a drop in the bucket for struggling families facing rising food, fuel, and living costs. It’s a political photo-op, not real relief. XCD1 million divided by 170,000 people equates to $5.88 per citizen.”

The UWP, in visible divergence, proposed measures that are regressive to returning Saint Lucia to adverse economic hardship.

 “The UWP’s plan to permanently remove the 2.5 percent levy offers over $40 million every year back into the hands of taxpayers, a measure that empowers families, strengthens businesses and boosts the economy all year round; $40 million divided by 170,000 people equates to $235.29 per citizen.” ~ UWP.

People-driven approach

The Pierre administration says with confidence and first-hand data that “a balanced and people-driven economic approach is a celebration of compassion, leadership, and trust in the Saint Lucian people,” considering the following:

• The debt-to-GDP (in the absence of rebasing) as of 2024 was 73.5% totalling XCD 5.1 billion. External debt accounted for 61.5% while the balance, domestic debt, accounted for 38.5%;
• The overall deficit was 1.8% of GDP, decreasing from 3.2% in the previous year. The primary surplus was 1.4% of GDP compared to 0.2% in the previous year. The current balance moved from a deficit of XCD3.5 million in 2023 to a surplus of XCD 27.5 million in 2024;
• Unemployment dropped to 10.6% in 2024 and reached single digits in the first quarter of this year, the lowest level on record;
• Payables to government supplies decreased from XCD 100M plus to 30M;
• Real GDP growth in 2025 is projected at 2.7%; (ECLAC data)
• Average inflation January 2025 is 3.18 %; (Global Economy)
• Infrastructure development and construction are booming – cause and effect – there is a high demand for tradespeople;
• Investment in tourism and hotel construction is recording its highest performance in modern history.

Prime Minister Philip J. Pierre

Illustrating the economics of Prime Minister Pierre and his administration’s tax reforms in the context of public policy substantiates indispensable financial support for working families and individuals.

Drawing on enabling factors and specific government initiatives, the SLP, in a press release, underwrites the Pierre administration’s tax reform.

“Not only improved household spending power but also boosted business confidence and strengthened national tax compliance. These people-first policies are designed to ensure (ing) that every policy, every reform, and every new initiative reflects the core Labour principle of “Putting People First.” ~ SLP

@GlobalCaribbean