BASSETERRE, St. Kitts – WITH the Citizenship by Investment (CBI) programme facing significant challenges both locally and globally, Prime Minister Dr. Terrance Drew is emphasizing the need to diversify the Federation's economy. Could reforming the tax system be a key step in achieving this goal?
Over the years, St. Kitts and Nevis has heavily relied on revenues from the CBI programme, which has accounted for an estimated 45-60 percent of the country’s revenue. However, the International Monetary Fund (IMF) has highlighted the risks of such dependency. In its country report earlier this year, the IMF underscored the urgent need for comprehensive tax reforms to enhance the country’s revenue streams.
During a recent IMF press conference, SKNVibes News asked Julie Kozack, Director of the IMF Communication Department, to elaborate on the recommended tax reforms. Kozack explained that these reforms aim to reduce the Federation’s reliance on CBI revenue while creating a more equitable and growth-friendly tax system.
“Our staff have recommended a comprehensive tax reform to make the tax system for St. Kitts more growth-friendly and equitable, and also to reduce dependence on CBI revenue,” Kozack stated.
Dr. Drew, who also serves as the Minister of Finance, has advocated for reducing the nation’s dependence on the CBI programme. However, his administration has not indicated whether tax reforms, such as reinstating personal income tax, are a priority.
The removal of personal income tax decades ago has been a significant benefit for residents. Reintroducing it could improve the country’s fiscal position but would likely face political resistance.
“A more progressive tax system and the elimination of distortions caused by certain tax concessions would benefit St. Kitts and Nevis,” Kozack noted. “The goal would be to enhance both the equity and economic efficiency of the tax system.”
In its diversification efforts, the government has begun pursuing investments in various sectors. For instance, a pilot project for Tabasco pepper production was recently launched.
At the same time, the government is working to strengthen the CBI programme to address global challenges.
As the Federation seeks a path to sustainable economic growth, the balance between tax reform and diversification remains a critical issue for policymakers.
