Fiscal Policy

Managing the Money with Prudence and Enterprise

The Unity Labour Party Manifesto 2015
Table of Contents


The ULP Government has demonstrated its capacity, and a sense of responsibility and balance, in managing the central government finances in the face of the worst global recession for 100 years and multiple natural disasters, between 2008 and 2014.  It has done so with prudence and enterprise while standing firmly against the dangerous and wrong ring wing idea of austerity advocated by our political opponents. Our government has kept the public debt at manageable levels, below 78 percent of Gross Domestic Product, the lowest in the Eastern Caribbean Currency Union (ECCU).  We are on target to reduce it to 60 percent of GDP before 2030.  Our borrowings have been overwhelmingly on concessionary terms (long-term debt at low rates of interest) and we have hardly incurred commercial debt.  At the same time, the government has implemented a hefty Public Sector Investment Programme (including the largest capital project ever -- the Argyle International Airport), enhanced real wages and salaries in the public sector, increased public sector employment, expanded expenditure significantly in education, health, social welfare, and citizen security.  Simultaneously, our government has contained an increase in taxation; indeed it has reduced the rate of personal income tax and company tax.  Unlike some other ECCU member-countries, SVG has not defaulted on its debt; it has paid its employees on time, and it has not retrenched workers.

Over the next five years, the ULP government will:

  1. Continue to provide an appropriate balance between the objectives of injecting a stimulus, engaging in fiscal consolidation, and maintaining a sustainable, viable debt path.  Prudence and enterprise thus ride in tandem in our small, open, resourced-challenged, developing economy.
     
  2. Pursue vigorously, our government’s Fiscal Covenant which emphasises:
    1. Fiscal consolidation;
    2. Improvement in public revenue measures, including compliance and administration;
    3. Sensible management of deficits and debts, including a focussed debt management strategy.  A well-staffed Debt Management Unit has been established and will be further strengthened;
    4. Improvement in the productivity of public expenditure;
    5. Transparency of public expenditure;
    6. Safeguarding equity and the social safety net through fiscal measures;
    7. Facilitating economic growth and job creation through sound, fiscal measures which eschew austerity;
    8. Strengthening further the institutional framework through democratic controls, accountability, and monitoring in fiscal measures.
       
  3. Push to Implement the following fiscal targets: A debt-to-GDP ratio of 60 percent before 2030; central government savings of at least 4 percent of GDP; and current revenue-to-GDP ratio of 25 percent, both by 2020.  Alongside these is the pursuit of other macro-economic fundamentals, namely: containing the external current account deficit to a manageable limit; low-to-moderate inflation; and real economic growth annually of 5 percent over the medium-term.
     
  4. Push to reduce further personal income tax and company tax in at least three ways:
    1. Reducing the standard rate from 32.5 percent to 27 percent;
    2. Keeping the rate for tourism enterprises at the current rate of 20 percent. [The ULP already reduced this rate from 40 percent].
    3. Reducing taxation on working people by raising the income tax threshold for payment of income tax from $18,000 annually to $21,000 over the next five years. [The ULP previously increased this threshold from $12,000 to $18,000).
       
  5. Continue the process of tax reforms so as to promote equity, fairness, investment, job and wealth creation. There will be no increase in the tax burden. In this regard, we will continue our efforts of removing VAT on even more food items and reducing it on electricity.
     
  6. Continue the search for other creative revenue measures which do not affect adversely the people, especially the poor and working people, and productive investment. We continue to oppose strongly the Opposition’s proposal to sell Vincentian citizenship and passports to foreigners. The ULP will never put your national identity up for sale!

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