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Sunday, 04 February 2018 10:35

St Lucia a day late and a dollar short on EU blacklist Featured

By Melanius Alphonse  

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. The EU Council statement said: “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.” It noted 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 timelines that have been set out 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.

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.”

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.

“There can be absolutely no excuse for that level of negligence. The government does not care about the things that matter for the international reputation of St Lucia.

“By failing to take the necessary steps to cause Saint Lucia to be taken out of that blacklist has further jeopardised Saint Lucia, jeopardised the economy of Saint Lucia and it’s a very bad omen for our island to remain on that blacklist when countries/islands in the region who were there together with us in December have taken the necessary steps to come off that list.

“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.

”There is going to be a conference call and of course ongoing dialogue with the EU on this issue, so we do anticipate that Saint Lucia will commit to taking the necessary steps to also be removed from this list.

“…Saint Lucia from the beginning at the highest level has always made a commitment to tax transparency to tax restructuring. But it is a process and I think that’s one of the things we are discussing with the EU that this will take some time.

“We also have to strike a balance between our tax structure and also encouraging investment in our country. We are a small island developing state much like the rest of the Caribbean and competition out there is stiff. What we need to find is a balance which is what the government is working to towards right now.

“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.

“So this is an ongoing exercise, it has been ongoing, and we have been in dialogue throughout 2017, with the EU already, so there is no specific time line; it is definitely an ongoing exercise.”

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.

“There is a review committee early in February, I think, and once the committee accepts Saint Lucia’s letter, then the process of coming off the list, and going into what is called the grey list starts. So, I’m very confident … that Saint Lucia will be coming off the list.”

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.

Notwithstanding, the prime minister and his senior communications officer have become their own story, but they could not have erred more on the fundamentals relevant to the EU blacklist.

Awaiting the so-called letter morphed into a conference call, followed by a response letter (still in limbo) simply to comply and commit after the fact.

This suggests, even on the rational principles of international law, weakness on domestic proposals and policy.

In counter rhetoric of joint responsibility, the prime minister says, “So we expect to be told specifically what the concerns are, to which we will respond.”

Nothing could be further from the prime minister’s tortured radiance to submit that his administration has “done everything within its power to meet the tax requirements.”

Now, in his own words: “So once I understand the specifics of what the complaints are, like Grenada and Barbados we should be able to get off the list, and hopefully by next month we would have accomplished that.”

This is pathetic.

Melanius Alphonse is a management and development consultant, a long-standing senior correspondent and a contributing columnist to Caribbean News Now. His areas of focus include political, economic and global security developments, and on the latest news and opinion. His philanthropic interests include advocating for community development, social justice, economic freedom and equality.

The article published above is a letter submitted to www.whatsupcaribbean.com and is the writer's view/ opinion and should not be considered as the view of Whats Up Caribbean or of it's staff.

 

Last modified on Sunday, 04 February 2018 11:01

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