Basseterre, St. Kitts, October 26, 2015 (SKNIS)—The announcement of one Value Added Tax (VAT) Day instead of two as in previous years is being hailed by the Ministry of Finance and the Chamber of Industry and Commerce (CIC) as a measure of fiscal discipline.
The VAT Day will be determined between the CIC and the Ministry of Finance.
Speaking at the National Consultation on the Economy at the St. Kitts Marriott Resort on October 22, Prime Minister and Minister of Finance, Dr. the Honourable Timothy Harris, said that the Cabinet had taken the decision to have only one VAT Day this year “in the context of the recalibration which we must do, in the context of renewed fiscal discipline, in the context of the reality that already for this year we have provided 100 million dollars of concessions.”
“…and as we recalibrate the Government’s agenda and its incentive mechanism, that is an area in which we want the private sector to become more involved—truth be told, for the year so far, the government has already delivered to the private sector tax concessions of over one hundred million dollar (between January-July, 2015)—and that figure I’m advised by the financial secretary does not include exemption from corporate taxes to tax holidays. This is a significant contribution that the Government has made,” Dr. Harris said.
The Prime Minister also said that the Government has been advised to cut back on the number of concessions that it gives to the private sector.
“…and we therefore have to be careful because this has been a source of engagement with the International Monetary Fund (IMF). The IMF has said repeatedly—and the Central Bank—that we have to look at our concessions system and whether or not they have become anachronistic in a new age where there should be a levelling of the playing field. We therefore have to be careful that we do not create too many inequities in moving forward,” Dr. Harris said.
Some have criticized the move of the Government to have just one VAT Day but Prime Minister Harris said the Government has made the right decision at this time.
“VAT has already been removed from food, medicine, funeral expenses, which have brought substantial relief to consumers especially those on lower incomes. There is no VAT on these things for 365 days of the year,” the prime minister said.
Additionally, Mrs. Hilary Hazel, the Financial Secretary, has revealed that available statistics have shown that the prices on food and beverages declined by 9.5 % over the period January to July this year compared to 2014.
Prime Minister Harris said that in considering the matter to give one VAT Day, Cabinet looked at the evidence where there were two VAT days last year but one of those days did not yield significant results because people didn’t have enough money to shop because it came before pay day.