It’s nine days until the implementation of Value Added Tax in Saint Lucia. For well over a decade—even more depending on whom you speak to—there had been talk of introducing the tax. Now, at what seems like the final hour it seems that there are still some unanswered questions and major hurdles for the business community and consumers.
Come 1st October 2012, Value Added Tax will replace consumption tax, environmental protection levy, hotel accommodation tax, mobile cellular tax and the motor vehicle rental fee. The latest issue with the Value Added Tax centers around the all-important tourism sector.
Over the last few days the STAR has received several calls from irate workers wanting answers to one question: will service charge be Vatable?
Clement Thellis, a driver from the Bay Garden’s Hotel after receiving a letter from the NWU stating that Service Charge earned by workers employed within the Hotel and Tourism sector will be “vatable” was angry, to say the least.
“My concern is that is that I believe in the old saying, never make promises that you cannot fulfill or you will not be able to fulfill,” Thellis said. “During the run up to the last general elections this new government said too many things about better days are coming. Enough is enough. I want to send a strong message to this government. I work as a hotel employee; we bring a salary home which without the service charge your pay is low. Now you don’t get the service charge high every day to suit you because you don’t have the tourists as bountiful all the time, but we still accept it, because even if it isn’t a consistent thing, you still have job, you can pay your bills and send your children to school.
Thellis went on: “Now we the hotel workers will be charged VAT in buying our goods through the supermarkets and stores and now today these fellahs are talking about Vating us on our little service charge.”
The National Workers Union has also been bombarded with calls from members over the issue of service charge being Vatable.
On Thursday president of the National Workers Union Tyrone Maynard released a statement calling for answers, or else!
The “or else” refers to the shut down of hotels on the island where the union represents workers.
Read the statement: “The National Workers Union (NWU) has been reliably informed that Service Charge earned by workers employed within the Hotel and Tourism sector will be vatable. The NWU has made some attempts to get further clarification on this issue but without success. At present the NWU represents workers at the following hotels: Anse Chastanet, Jalousie Plantation Resort, Goddards Catering Group Limited, Morgan Bay Beach Resort, Rex and Royal St. Lucia Hotels, Smugglers Cove Resort & Spa, Spinnakers Restaurant, Ti Kaye Village and St. Lucia BLU. The NWU is of the strong opinion that should such a decision be implemented this would have devastating economic effects on hotel and tourism workers.The NWU therefore will have no other option but to shut down the various hotels. The NWU has communicated its decision to the Saint Lucia Hotel and Tourism Association.”
Speaking with the STAR on Friday Mr Maynard said he was still seeking clarification on the issue from the VAT office.
Said the NWU president: “We have decided to begin our mobilization campaign among hotel workers and among other workers within the tourism sector to prepare ourselves. We will not accept it. Period.”
Maynard said that strike action by workers is a last resort following talks he hopes to have with the hotel sector and government.
“If that is the way we are going, it is the wrong way to go. I am hoping that people will be sensible enough to understand that workers are currently under a lot of stress and pain. The occupancy levels are not high. “This kind of news about service charge is not the best for them at this point. I hope we can all put our heads together and at least diffuse this situation.”
Maynard added that some staff depend on the service charge as part of their salary every month.
“Service charge is paid to employees. It is ten percent on whatever persons come there for, whether it’s dinner or lunch. At the end of the day that is what helped to bolster the meager salary that is paid to tourism workers. We have to be extremely careful in this kind of situation . . . or else we will run ourselves into a confrontational situation.”
But a shut down? In the current economic climate, wouldn’t this affect workers and operators even more negatively?
“We have indicated that this is the direction we would go. That is our final step,” said Maynard. Changing the fact that service charge is Vatable would mean going back to Parliament, but Maynard states that this may well be what the government needs to do.
“It is not cast in stone. Whatever you do you can take it back to Parliament and establish an exemption. When legislation is passed it can be improved and amended,” he said.
But why is the NWU so surprised by this issue? Shouldn’t this have been part of the VAT sensitization drive or shouldn’t the onus have been on the union to review the legislation ahead of time?
The VAT Implementation Office told the STAR that it was always on the cards fro service charge to be taxable.
A communiqué from the office highlighted that service charge forms part of the value of the supply as “the service charge is being paid by the guest or the person paying for the service. The service charge amount that the employer will give to the staff will not attract VAT.”
As for the St Lucia Hotel and Tourism Association, they informed us that they have not yet come across correspondence from the National Workers Union and were not prepared at press time to release a statement on the issue.