Back in 2007 the government of Grenada presented a White Paper to re-introduce VAT on February 1, 2010.
It was billed as the “saviour” of a faltering economy where government spending and borrowing had run amok.
Government Debt to GDP was rising dramatically as a result of budgetary excesses. In 2008 debt was 72.6% of GDP. By 2010 it was 86.9%. In 2012 (two years after VAT implementation) it was expected to be 88.5%.
The verbiage from their PR programme sounds eerily familiar:
“…The implementation of VAT will assist in restructuring the tax system to make it more responsive to economic development, and be simple to administer. More importantly, VAT will be used to create a new culture of voluntary compliance.”“…Under the VAT, the tax base will be broader (more goods and services will be included)…”
In 2009 the government of Grenada gave assurances“that the proposed Value Added Tax (VAT) will not increase the tax burden on Grenadians when it’s implemented.”
The Grenadian government indicated that “The proposed VAT is intended to be the gateway to Grenadas tax reform programme. It is hoped that it will bring higher levels of efficiency in the tax system, thereby encouraging voluntary compliance amongst tax payers. We solicit your support and ideas to realize the smooth and effective implementation of VAT.”
Pay close attention to the language. There’s nothing there about the government being more efficient and guaranteeing a reduction with its spending and borrowing.
Of course, since the VAT implementation in 2010, the picture tells a different story.
