St. Lucia – A Day Late And A Dollar Short

By Melanius Alphonse

News Americas, CASTRIES, St. Lucia, Fri. Feb. 2, 2018: Following their European Council tax haven blacklisting in December 2017, Barbados and Grenada immediately dispatched detailed correspondence requesting an urgent review. Their sense of urgency, coupled with commitments made at a high level to remedy EU concerns, produced results.

In January 2018, the EU Council removed both countries from the list of non-cooperative tax jurisdictions. An EU Council statement released stated: “It agreed that a delisting was justified in light of an expert assessment of the commitments made by the jurisdictions to address deficiencies identified by the EU.”  The statement added that these commitments were backed by letters signed at a high political level.

Saint Lucia was also on the original list but remains there for reasons of the island’s Based Erosion and Profit Strategy, (BEPS).

The logical question is, therefore, what efforts are being made to remove Saint Lucia from the blacklist and escape its negative consequences; and to reaffirm its resolve to be free from future transgression?

In December, Prime Minister of Saint Lucia, Allen Chastanet, said he was waiting for the letter that accompanies being put on the blacklist so that he could clearly understand what the set timelines are.

“So before I say anything other than that, I need to be able to wait for the letter to be able to react,” Chastanet said at that time.

Commenting on the situation, I highlighted the government’s failure to take meaningful action to address identified deficiencies or engage in a meaningful dialogue with the EU.

“Along with Saint Lucia’s fiscal dilemma and political problems, the EU placing Saint Lucia on the black list for ‘failed criteria’ is indicative of the void in leadership,” I commented at the time.

At any rate, domestic policy and implementation fail to adhere to international regulatory compliance. The most recent, is Saint Lucia’s non-compliance with the European Council code, and subsequently being placed on the EU tax haven blacklist.

This assessment is a disadvantage to the country’s economic viability, and is clearly the result of the ineptitude of Prime Minister Chastanet and the burden of his cluster of government ministries.

Leader of the opposition, Philip J. Pierre blamed negligence on the part of the Allen Chastanet administration for the situation.

“The EU in their communiqué said that Saint Lucia does not apply what is called BEPS minimum standards,” Pierre stated, noting that BEPS refers to tax plans used by multinational companies that exploit gaps and mismatches in tax regimes to artificially shift profits to low or no tax locations where there is little or no economic activity.

“All Saint Lucia had to do was to commit to changes by December 2018. It is because of negligence of the government that they did not give the EU a commitment. All that they had to do was to give the EU a commitment that they would deal with the BEPS,” the opposition leader told reporters.

Indeed, on January 18, 2018, Pierre again blamed the government for negligence:

“News from Brussels says that Saint Lucia remains on that blacklist even if island who were on that blacklist together with us in December were taken out and put in some other category.

“This speaks to the negligence of the government, the failure of the government to do what they had to do to cause Saint Lucia to come off that blacklist. I call on the government to take the immediate steps to cause Saint Lucia to be off that blacklist. Grandstanding and useless talk will not help us. By remaining on that blacklist our country is jeopardizing its future in many ways.”

What indeed is the government of Saint Lucia doing to free itself from the difficult times ahead, exacerbated by every day it remains on the blacklist?

According to senior communications officer in the office of the Prime Minister, Nicole McDonald, the government has written to the EU stating that officials are ready to dialogue and are committed to tax transparency.

“We have been engaging in tax reform from since we took office, we’ve been doing certain things in terms of changing the tax structure, our aim was always to put less burdensome taxes on the taxpayers of this country. So we are seeking to change our tax structure as well,” she stated recently.

The day late and a dollar short nature of the government’s approach was explained last Wednesday, severely increasing socio-economic uncertainty.

The prime minister told reporters that a conference call was held with the EU on Monday. And a letter from the government of Saint Lucia has been drafted outlining Saint Lucia’s position of commitment to the EU.

To revisit my thinking on these issues, the reality is, when politicians and bureaucratic interests don’t know what to do, they resort to raising process issues, which leaves the situation vulnerable to political charlatans, who tend to muddy the water in search of an escape route.

It is most critical that the finance minister undergoes a transformation to understand that the laws of finance should trump dark political art forms that are incompatible with good governance, logic, arithmetic and science. And it does not take much insight and intellectual competence to sum up the adverse impact of these unacceptable basic deficiencies to people and country, and hold persons responsible and accountable for the current dilemma.

Pretence will not deliver the prescription for development; therefore, cutting off the hands of corruption is a course correction that must be undertaken to uphold international covenants and preserve sovereignty.

The fact of the matter is the elephant is still in the room and it is only an illusion to think that with time it will disappear or succumb to a natural death.

EDITOR’S NOTE: Melanius Alphonse is a management and development consultant, a long-standing senior correspondent and a contributing columnist. He can be reached at melanius@newsnowglobal.com