BASSETERRE, St. Kitts and Nevis: Parliament’s passing of the controversial 17 per cent Value Added Tax bill last week was marred by a boycott of the vote by the opposition People’s Action Movement (PAM).
The opposition benches were empty when the vote was taken, allowing the VAT Bill to pass after three days of debate.
Earlier in the week, PAM MP Eugene Hamilton said the rate was too high and that it should be set at 10 per cent across the board and capped.
However, Prime Minister Dr. Denzil Douglas said the VAT, which will go into effect on November 1, is a vital component of his government’s economic stabilization plans.
“The global situation is harsh. It is still not settled in the way one expected it to settle. We do not have the luxury, therefore, of delaying anything. We have to move forward,” Douglas told Parliament.
“We have to move forward on our programs. That is why the Eastern Caribbean Central Bank…is working closely with the various governments in the Eastern Caribbean Currency Union to ensure that we stay on course in terms of stabilization of the economy and ensuring that there is growth and development,” said Douglas.
Douglas said VAT introduction was only part of the overall plan and that controlling government expenditure will also play a role in the stabilization effort.
He said Cabinet has a document from the Finance Ministry outlining how various ministries have been controlling their expenditure. In addition, other government agencies and departments have also been working with the government’s Entities Oversight Board to make sure expenditure is kept in check.
Douglas said the government has taken steps to ensure that the local business community has an opportunity to improve its competitiveness.
“We’ve put in place the Competitiveness Council, which is working…It has had a body of recommendations to bring to my attention, I understand, as to how we can stimulate the economy and making sure that we are more competitive as a jurisdiction in dealing with the rest of the world.”
Among the taxes being abolished with the introduction of the VAT are the Consumption Tax, the Hotel Accommodation and Restaurant Tax, the Cable TV Tax, the Vehicle Rental Levy, the Insurance Premium Tax, the Export Duty, the Public Entertainment Tax, the Lotteries Tax, the Gaming Machine Tax, the Traders Tax, the Telecommunications Levy, the Island Enhancement Fund and the Parcel Tax.
The 17 per cent rate will apply to services and goods. A 10 per cent rate will be applied for the tourism industry.
There will be exemptions for a range of basic goods and services including interest and loan payments, some medicines for chronic diseases, bus fees, residential rent, local farmers’ produce, fuels such as gasoline, diesel, cooking gas and kerosene, articles specific to disabled persons, printed reading material and some imported food.