Private sector representative in the Senate, Christopher De Allie has took potshots at the ruling New National Party (NNP) government of Prime Minister Dr. Keith Mitchell on the generous concessions granted to officials of St George’s University (SGU) in a new agreement to operate on the island.
Speaking at Monday’s sitting of Parliament, Sen. De Allie accused the 18-month old regime of discriminating against local businesses and showing a greater level of favouritism to SGU on their Value Add Tax (VAT) contributions to the national purse.
He noted that foreign employees at the university are charged VAT at the rate of 15% but local employees at the same institution are subjected to 30% VAT.
“15% is a form of discrimination. It raises the question, why are they (the foreigners) getting preference when locals have to pay 30%. When we negotiate these things – can they be challenged?” he said despite welcoming some of the changes to the SGU agreement.
SGU is the island’s largest single employer contributing approximately 15% of Grenada’s Gross Domestic Product in excess of $268 million yearly to the economy.
However the recent introduction of a Structural Adjustment Programme (SAP) by the Mitchell government to address a severe fiscal situation facing the country forced it to address concessions given to SGU.
Government says that the university would also have to make its shared sacrifice like other citizens.
Legislation was recently introduced in Parliament that specifies that foreign employees not subjected to VAT payment due to their citizenship are now entitled to contribute to the treasury.
The specific bill addressing SGU says: ” “To the extent that any faculty who are not citizens of Grenada are subject to the Income Tax Act Cap. 149 or any other Act pertaining to the imposition of a personal tax, they shall be taxed at the rate of fifteen (15%) percent of their gross income and the same shall be deducted by the University from payment to be made to such individuals and paid into the Treasury”.
De Allie told the meeting of the Senate that he was disheartened with the level of negotiation undertaken by Grenadian officials with SGU for the use of the nation’s General Hospital and other health facilities.
Under the deal worked out, the university agreed to continue paying Government for medical supplies, equipment and personnel salaries, the sum of US $250,000.00 per annum for the General Hospital and other health facilities.
However, Sen. De Allie believes that government should have gotten much more from the University which is known to pay in excess of US$1 million for use of medical facilities in the United States.
“Did the negotiating team look real hard at what we getting for this use?” he asked.
The new SGU/Grenada agreement mandates the university to pay government the additional sum of US $200,000.00 to be used at the discretion of the island’s rulers.
SGU was also required to set aside a budget of US$50,000.00 per annum for projects and services agreed to by the participating parties in the agreements to be worked out at meetings of the Monitoring Committee set up by the two sides.
As part of this agreement, the stipulated sums will be increased each year, beginning March 2015 by 4% per annum.
Sen. De Allie also took issue with the level of concessions granted to the institution when local businesses are struggling and not afforded the same benefits.
As part of the new SGU/Grenada agreement, government also agreed to grant the University 100% exemptions from duties and taxes (including VAT), on all imported construction materials for the functioning of the University until January 1, 2015 and at the level of 50% thereafter.
The Private Sector representative in the Upper House dropped hints that the agreement was not good for the local construction industry.
“What are you doing to construction … give the locals a chance,” De Allie said as he questioned government’s good negotiating skills.
He called on the administration to carefully “analyze what we get for what we give.”
Sen. De Allie also expressed concern that the amendment to the SGU/Grenada agreement was already gazetted by Government despite it now being taken through Parliament to officially become law.
Government is said to have granted SGU $3.5 million in tax breaks from duties and concessions in 2013.