BASSETERRE, St. Kitts –MINISTER of Finance, International Trade and Commerce Dr. Hon. Timothy Harris has stated that the Value Added Tax (VAT) will not be forced upon the Federation in a quick manner simply because the global financial crisis continues to hamper the economy.
“Tax reform is an ongoing exercise and it is not made more important by the reality of the economic recession. It is something that has to be ongoing. We always have to look at the way government intervenes in the economy and whether desirable goals are being achieved,” Minister Harris said at a recent press conference.
Harris stated that his government is currently attempting to identify the most appropriate measures of tax reform for the Federation. He added that the implementation of any tax must be preceded by a detailed consultation between the Nevis Island Administration and the Central Government.
“We have not yet concluded [our tax reforms] because any tax measure in which we are going to become involved with will have to meet the unique dictates of our Federation. There will usually have to be lots of consultation and some of these have already begun.
“We have an active tax reform unit, comprising of representatives from both the NIA and the Federal entity, which is looking at these avenues to see which of these [options] are feasible in our context. Sometimes they are technically feasible, but may not be politically feasible given the realities of the Federal arrangement,” Harris explained.
VAT was recently recognized by the International Monetary Fund (IMF) as one of the key revenue reforms to “minimize fiscal slippages” in Eastern Caribbean Currency Union countries with very high public debt levels. Other economic reforms put forward by the IMF included containing expenditures, enhancing the efficiency of public investment and strengthening debt management.
On April 1, the Ministry of Finance implemented a six-month tax amnesty with a 100% waiver on interests and penalties, which Harris said would engender significant revenue for the economy.
It remains uncertain at this time when VAT would be introduced, but some economists believe it may be soon, as the government continues in the quest to find appropriate tax reform measures.
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