St. Lucia is a multi-party parliamentary democracy, based on the British model of government. As part of the British Commonwealth, St. Lucia has the British queen serve as chief of state and is represented by a governor general. A prime minister and deputy prime minister lead the government. There is a bicameral parliament. The East Caribbean Supreme Court has jurisdiction over St. Lucia as well as several other Caribbean islands.
From 1964 until 1996 the island's politics were dominated by the United Workers' Party (UWP) led by John Compton. He held power during that entire period with the exception of 1979-82, when the St. Lucia Labour Party (SLP) was in office. Compton retired in 1996 under allegations of corruption, and in 1997 the SLP, headed by Kenny Anthony, won an overwhelming election victory. The SLP is generally considered to be more left-wing and sympathetic to the trade unions than the UWP, while the UWP was supported during the 1980s and early 1990s by a more prosperous sector of banana growers. Little separates the 2 parties in policy now that the banana industry has collapsed. Both are keen to diversify St. Lucia's economy away from dependence on bananas and both welcome foreign investments in all areas of the economy. The SLP government has particularly tried to promote the island as a reputable center for international finance, but as yet it has not attracted a large number of foreign financial ventures.
Until the reform of the SLBGA and the ousting of the UWP in 1996, the banana industry was primarily owned and operated by the government. The minority UWP continues to provide advice and support though the ministry of agriculture and other state bodies, but the SLP has majority power in St. Lucia's formal economic policies. The Kenny Anthony government is more active in promoting the country's industrial and financial development than in saving the banana industry. The National Development Corporation (NDC) offers incentives to potential foreign investors. Roads, ports, and industrial complexes have all been built by the government in order to attract foreign investment in manufacturing and services.
Tax concessions are offered to foreign investors and there are plans to open a free zone at Vieux Fort, where foreign businesses would be able to import and export goods without paying duties . The government raises revenue from foreign companies after a tax holiday has expired, but many foreign companies leave just before the tax holiday has ended. Other principal sources of government revenue are sales and property taxes as well as the various taxes charged to tourists, including hotel room taxes and airport departure taxes. In a 1999 report on the St. Lucian economy, the World Bank suggested that the government's concessions to foreign businesses were too generous and that the economy would benefit from the introduction of a uniform value-added tax .