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Saturday, October 20, 2012

What’s VAT? New in St. Lucia

VAT sign in IslandWaterWorld chandlery.  While VAT did impact
prices, all businesses in Rodney Bay Marina enjoy the
price advantage of being duty-free.

St. Lucia’s VAT or Value Added Tax began implementation amid protest October 1st 2012; they are the last independent territory in the Caribbean to implement it.  It’s primarily a business pass-through tax, and a replacement to a host of other taxes
(click here for more info).

VAT’s entrance was heralded with empty grocery shelves, prompted frenzied by last minute pre-VAT purchases and stores reducing and pulling product for VAT re-pricing (unlike sales tax in the U.S., which is applied at the register rather than included on the shelf price). 

Given that many bare shelves were VAT-unaffected items (like most of the fresh produce), there was lack of clarity among the general public (much less tourists like us, passing through) regarding what was and wasn’t subject to VAT.   In the days and weeks that ensued post-VAT, we regretted not stocking up on non-perishable VAT-affected items; most are now 15% higher.  We really noticed this on post-VAT grocery store shelf prices.  

There is little doubt that average and low-income residents were particularly hard hit as they were likely less subject to the taxes VAT "replaced."  It would appear some business factions were better than others at gaining VAT concessions, particularly hotels, important to the tourist-dependent St. Lucian economy, though not much help for us cruisers.

Martinique, a French territory and our next stop, is a VAT-free area, however we've heard it is more expensive, overall.