Hon. Philip J. Pierre Presents The Income Tax Amendment

Mr. Speaker, earlier on in the debate in the meeting of this honorable house, I spoke about taxation, Mr. Speaker, and how the government had tried its best to relieve the burden of taxation on the public of St. Lucia even when the public was at fault and that did not pay things like the VAT. Mr. Speaker, this amendment to the income tax is further relief to the people of St. Lucia. Further relief. You may recall that we amended the income tax act to cap the allowances at $30,000, which meant that no one in the preparation of their income tax returns could claim more than $30,000 of allowances, Mr. Speaker, except medical costs where once you could prove it, you could claim all your medical expenses for obvious reasons. Medical expenses are very high, Mr. Speaker, and not all of them are available in St. Lucia, so if you go abroad and you can prove it, you could claim all your medical expenses. But for the remainder of the allowances, you could only claim $30,000. Mr. Speaker, to give people more money in their pockets, we increased the allowances to $40,000. So you could claim a total of $40,000 for your allowances when you are preparing your tax returns. Mr. Speaker, we also allowed people to claim solar PV systems components in 2025, energy saving equipment. For your solar components, you could claim 100% for the year 2025, Mr. Speaker. So what this amendment is doing is changing how you can claim the allowances within the $40,000 cap, excluding medical and in 2025 solar PV, Mr. Speaker. And here's what it is. It increases the maximum child allowance to $5,000 per child below the age of 18 years. So you can claim $5,000 for the child; before I think it was $2,500. You can claim $5,000 for your child. Mr. Speaker, it also increases the dependent relative allowance from $350 to $5,000. And that is significant because supposing you are caring for your dependent relative, you could only claim $350. Now you can claim $5,000 because the cost of taking care of elderly people is very high. So it has gone up from $350 to $5,000. Mr. Speaker, you can also claim $40,000 for your mortgage. So you can claim your entire $40,000 allowance in your mortgage. What that means is if you have no children or no dependent relative, you're a young professional, you can claim your entire mortgage. You can claim $40,000 for mortgage interest. So that helps the up-and-coming professional who hasn't got a responsibility yet. In the early stages, he or she can claim $40,000 of mortgage interest. The $40,000 of mortgage interest, Mr. Speaker, before it was capped. So you can claim everything to help you pay back your house mortgage. And that is in addition to the removal of VAT on some building materials. You can claim the $40,000 mortgage interest, not more than $40,000 mortgage interest. Mr. Speaker, you can also claim $10,000 for higher education. Before you could only claim $5,000. So if you have a child at university, you can claim $10,000 instead of five. But noting, Mr. Speaker, within the cap of $40,000. That is very important. Within the $40,000 cap maximum, you can claim for your child $10,000 for university education. Mr. Speaker, to encourage savings and to encourage credit unions to expand and to grow, you can now claim $10,000 for your credit union shares under section 57 of the act. Mr. Speaker, there is a new provision in that amendment, and that again is to encourage savings, to encourage diversification of portfolio, and to create a nation of people who understand the value of savings and who understand the value of keeping something aside for a rainy day. We can take from our parents and the people who came before us; within their little salaries and within what they got, they always put something aside and they said you put something aside for a rainy day. Mr. Speaker, that is something that we must encourage within our young people: in spite of what you get, save something, put something aside. That is how you create growth and you're going to invest. So to encourage that, where in an income year a resident individual invests in any security instruments including treasury bills, treasury notes, bonds, shares, and mutual funds issued by a local or regional institution, he or she is entitled to a deduction equivalent to the value of the investment purchase up to a limit of $10,000 annually. So if you invest $2,000 in shares or in a mutual fund at the Bank of St. Lucia, you're going to claim all of it within the cap of $40,000. Mr. Speaker, and a very significant one: all income derived from pensions are exempt from the payment of personal income tax. All income, whether it's government income or private income from pensions. All pensioners get all income derived, and that's important. That's important because you find that pensioners had to pay after they've worked and paid their tax; when they get their pensions, they have to pay more tax. And that is part of the government's actions as it relates to pensions. You may recall we increased the NIC minimum pensions from people getting $200 to $500. We increased it and we've incrementally increased pensions throughout, and we've said that any time public servants get a pay increase, pensioners will get the exact pay increase. That is what we've done as far as pensions are concerned. Mr. Speaker, the deduction, no tax, is also on pension benefits from a National Insurance Corporation. We've amended section 561 by inserting section 52 to ensure that a taxpayer can claim medical expenses for a dependent relative. So if you're taking care of somebody and that person has medical expenses, you can claim it once you can prove that you have spent that on the person you're taking care of. So apart from increasing the allowance for dependent relative, you can now claim the medical expenses for that dependent relative, easing the burden on the people taking care of dependent relatives. Mr. Speaker, we amend section 563A to include as a tax deductible fertility treatment by a registered medical practitioner. You have not received, Minister of Health, fertility treatment. So if you have to go to a registered medical practitioner, whether you're a man or woman, for fertility treatment, you can claim tax rebate. So that should encourage people who want that treatment to visit a medical practitioner where you pay no taxes on that. So that is allowed once you can prove that you got this fertility treatment from a medical practitioner. You can claim it up to, hoping that you get good results. Mr. Speaker, the member of the library is laughing. That doesn't put into you an example. Mr. Speaker, we amended section 6314 to replace the words 'as tax' with 'as penalty' referring to the 10% deduction for early withdrawal from an approved pension fund. Mr. Speaker, and these amendments related to the personal income tax regime are backdated to January 2025. So we be passing it now. You got to claim it for your 2025 income. You can claim all these allowances within the $40,000 cap for the income year January to December 2025. Mr. Speaker, we inserted another amendment: an allowance of $50,000 for businesses investing in cyber security, artificial intelligence tools, and approved ICT training for staff. And we say that again: a business can claim up to $50,000 allowance if you invest in cyber security, artificial intelligence tools, and approved ICT training. You can claim $50,000 of business in your tax. But the Inland Revenue will have to develop operational guidelines to administer the new allowance of $50,000. The revenue will have to decide how they prove that you made that investment of $50,000. But having said so, every department will have to have stronger safeguards and monitoring of approved pension plans in order to reduce the possibility of the exempt pension policy being considered as an anti-avoidance measure by international partners such as the OECD. So it has to be monitored. The OECD, Mr. Speaker, and I want to inform honorable members that the OECD in its report for 2025, if you allow me to tell you, the OECD says about taxation in St. Lucia: St. Lucia's tax to GDP ratio in 2023 was 20.8%, which was below the Latin American and Caribbean countries. The average for Latin American countries was 21.3%, and for the OECD as a whole, the tax ratio to GDP was 33.9%. For the OECD as a whole it was 33.9%, for St. Lucia it was 20.3%, and for the Latin American Caribbean countries, St. Lucia was lower at 20.3%. So these amendments to the income tax act, as I said, are backdated first of all to give relief to professionals, middle-income people, give some relief to them. If you've just built your house and you haven't got any dependent relative or you don't have any children as yet, you can claim the entire $40,000. If you have medical expenses and that's very expensive, you can claim the entire amount for your tax. Also, we are helping you to take care of your dependent relative. We're helping you to diversify into renewable energy. So solar panel components you can get 100% tax; you can claim all of your tax. So it is rather a fact that St. Lucia's tax burden is not what some people want to make it look like. Everyone must pay their fair share. And you may recall that we have increased the tax threshold to $24,000 per year. Anybody who gets less than $24,000 per year pays no tax. And now we are increasing the total allowances to $40,000 from $30,000. This is a further promise of the government which we are fulfilling and we are backing it for the year 2025. I applaud the Inland Revenue for working with us to come up with these amendments. And I hope that the public understands that St. Lucia is not a highly taxed jurisdiction and those who owe the taxes pay the taxes. Mr. Speaker, I will just jump quickly on health and security levy. The security levy this year raised between $40 and $45 million. We are just working on the final figures now because estimates are next month. It raised about between $45 million and for the addition of personnel alone at the new central hospital, additional personnel alone, the new central hospital is requesting more than $30 million in additional staff alone, both professional and non-professional. And the health and security levy only raised between $40 and $45 million. And further, last week alone, we recruited 86 new law enforcement officers, including policemen and SAPS security officers. 86 new ones were recruited, and we have to pay them their salaries. The health and security levy only raised for the period between $40 and $45 million. And these two items alone, you'll see what it costs this country for health and security. The security levy is a necessary tax, but it doesn't meet a fraction of the expenses of security in this country. For independence, we are commissioning the new police headquarters, the northern police headquarters in Gile, that's been commissioned in February. The administrative block has been commissioned in February, costing the government in excess of $30 million. We've had to move the Anse La Raye police station to new premises. Health and security again, remove the view for police station expenses. In terms of the fire service, the investment in the fire service and the emergency services, we opened the West Coast fire post in enhancing economies, and why it was whist. But we opened it with an ambulance service. Health centers in Babonneau, in Faux, new health centers in Larus, addition smart health centers, expenses for health and security, universal health care for health and security, which I'm sure the Minister of Health will opine on. So I just want to say, in speaking about taxes, when you talk about taxes, talk about the health and security levy. You know that the government is spending more than five times in total what we collect from the health and security levy. Plus the fact, in VAT we removed the VAT on 70 food items, and I can tell you that the housewives and the people who shop in the store so bad, Mr. Speaker, are saying every day that they've seen a reduction in these prices because of the work of the government of St. Lucia and the former Minister of Commerce. So our history on taxation is clear. We have nothing to hide. Our history on taxation plus the tax amnesty where the government is giving up millions, and I was very happy to hear them from Microsoft talk about enforcement. I hope when the time comes for enforcement, he agrees and supports us because there are millions of dollars out there in unpaid taxes. Somebody was telling me that a businessman purchased cash a brand new vehicle for $27,000. So he said to him, 'But what about your tax?' He said, 'Guess how you paying that?' Shut up. Are you paying that? You understand? So everyone, we want better roads. We complain about healthcare. The cost of healthcare and the minister was right when he spoke of the accidents, how accidents increase the cost of healthcare. So we have to understand that this thing is not as simple as it sounds, not simple as saying whatever you want. The reality is that healthcare is expensive, very expensive, and St. Lucia's income tax burden is not as high as some people would like to tell other people. It's not. No one likes to pay taxes, but everybody should pay their fair share of taxes. And again, I'm urging the business sector to please pay the taxes that you owe the government of St. Lucia within that amnesty period. There's a big discussion on taxes, taxes on tourism. A big discussion, and the discussions are necessary and we should have them. We should have the discussion of taxes on tourism. There is a school of thought that says that tourism should not be taxed because of what it does in terms of employment, in terms of revenue, in terms of foreign exchange earnings, because tourism is an export industry. There's another body of thought that says that tourism should be taxed. These are two lines of thought as far as tourism is concerned. What has to happen? We have to decide which one is right for the circumstances in St. Lucia. And we know that there are discussions on whether the tourism workers are adequately paid for the work that they do. We increased the minimum wage already for our sectors. There was a suggestion that tourism people should get $2,500 a month. How feasible that was, I don't know. But the fact is, there is discussion, and the very fact that it was recommended that tourism workers should get $2,500 a month is an admission that they may be underpaid, maybe because there was a suggestion that they should be paid $2,500 a month. These discussions are good. We must bring them up in the open. We must open up the discussion on these issues, albeit some of it is partisan. But the whole idea of tax discussions, that the income tax should be simplified, a flat tax rate, that the discussions are taking place also that there should be a flat rate of tax, no allowances, just one allowance and a percentage, a flat tax discussion. So we wish that the time when we have to see about our own selves, we have to see about our own economy, we have to have the maturity to take firm decisions. And we have to understand that what we say, we must be able to back it up with fact, empirical evidence, not emotion. We've passed the stage of emotion. We need empirical evidence. And the bigger evidence says that St. Lucia's tax burden is not as high as some people may want to see. So I ask members to support this amendment to income tax and tell the people of St. Lucia that these changes are backdated for the income year 2025. I thank you.