BASSETERRE, St. Kitts – SINCE the total removal of VAT from food, funeral expenses and medicine, SKNVibes has spoken with a number of individuals about their views on the move.
The majority of interviewees expressed that they are happy and pleased with the new Administration’s decision to remove the 17 percent VAT from the three groups, citing that it is a welcomed relief to their pockets.
Conversely, there were those who said the move was a wrong one to make and instead of complete removal of the tax it should have been lowered to 10 percent. These individuals also declared that because of the total removal of VAT from these goods and services, they expect some other form of tax, such as Personal Income Tax, to be implemented within the near future.
However, in an interview with WINNFM, Prime Minister the Hon. Dr. Timothy Harris declared that no new taxes are presently being considered. He also addressed concerns of the revenue falloff which the VAT removal would bring.
“We are not now contemplating that there would be a need for us to engage in any new taxes to deal with any falloff with respect to VAT, and so we are monitoring that situation very constantly. I want to make the point that we expect that as a result of freeing up money in the pocket of people, people are going to make other consumption and investment decisions which are going to add to the flows. And we make the point that a low tax jurisdiction is to be preferred than a higher one…”
He said a low tax jurisdiction would encourage economic growth.
“The empirical evidence has shown that when a country proceeds on low taxes, the economic actions have been wonderfully good. And so businesses do better, consumers do better, they get more value for money and so we are going to get back into that pool as a result of the whole range of activities in which people will engage when they have more savings.”
He added that the decision taken by his Administration to remove VAT from the groups would also have a positive effect on alleviating poverty within the country.
“You also a have the additional benefit that you are dealing with a critical national challenge of poverty. The fact that we end up with over 2000-plus people on a PEP programme…some of them are graduates of universities of colleges etc., tells us that these people are just striving and we have to find ways that will create private sector growth because the Government, as it were, as a result of the IMF programme and otherwise, has admitted that it has maxed out.
“And so these transitory arrangements which are put in place have to give way to more permanent mechanisms that would lead to growth and expansion in their country, and the VAT measure would do that.”
Value Added Tax (VAT) was introduced in St. Kitts and Nevis in 2010.
