BASSETERRE, St. Kitts –THE introduction of a Value Added Tax (VAT) has sparked yet more debate regarding the appropriateness of the November 1 deadline, with the local business community noting its concerns in this regard.
VAT’s arrival was announced by Prime Minister and Minister of Finance Hon. Dr. Denzil Douglas in the 2010 Budget on March 23, and the St. Kitts-Nevis Chamber of Industry and Commerce (CIC) stated that the nation must brace itself for a “major paradigm shift” in its tax regime when the consumption tax is put in place.
According to the schedule for implementing the new tax as set out in the Budget Address, a widespread Public Awareness and Education Campaign is expected to be launched at the beginning of April 2010 and by the following month all relevant legislation must be passed in preparation for VAT.
The Chamber expressed its concern on record with the given timeline, noting that there is still much work to be done – and to be done correctly from the outset.
“While the Chamber realizes that VAT has been introduced in other OECS territories from whose experience we can learn, the Organisation has serious reservations over the time-lines put forward by the Minister of Finance, insofar as the execution of massive public education, national consultation, passage of the requisite legislation, and actual introduction of the tax are concerned,” a press release issued by the CIC yesterday (Mar. 26) stated.
The press statement went on to say that the new VAT system would place major responsibilities on the private sector to assist in its tax collection. The new tax, according to the CIC, will demand considerable investment in staff training, education and appropriate computer software and would force the private sector to face serious penalties and fines if the rules and regulations of the VAT system are not followed to the letter.
The communiqué adds, “While the Chamber realizes that the 2010 Budget does contain other austerity measures designed to address the grave financial strain in which our Country finds itself, it is the introduction of this consumption-based tax on goods and services that will demand the most adjustment, preparation and acclimatization in the short to medium terms.”
These concerns did not sit well with PM Douglas, and in closing the debates on the 2010 Budget he levelled sharp criticism against the credibility and independence of the CIC. Douglas said that the issue of VAT has been in discussions for the past three years, adding that it was a known fact that VAT would have been introduced.
“It will come from discussions. It’s not being imposed. It will come out of consultation. This VAT thing has been around for over three to four years, so I don’t understand why all of a sudden they are talking about VAT in this way. They knew that VAT was coming!”
In response to a similar statement made by the CIC President Michael Morton, in which he opined that the time for consultation and public education was “too short”, PM Douglas said Morton is allowing what appears to be a close political alliance with the opposition People’s Action Movement to cloud his professional judgement.
“That’s another one asleep; too much politics in his head. That’s why he don’t understand. Because they talking about VAT for the last two and a half years. The Ministry of Finance has had consultations with the private sector on VAT. So, how come the Chamber of Industry and Commerce Mr. Michael Morton does not know? ... They all full of politics that is all!
“He was too busy in the PAM executive meetings planning to remove this government. That is why there is no credibility with regard to some people in the Chamber—no credibility whatsoever because this kind of nonsense he is writing and putting out there to the press.”
Similar concerns with the timeline were raised by President of the Institute of Chartered Accountants of the Caribbean, Harryram Parmasar, in an interview on WINN FM. He said implementing VAT by November 1 is “not enough time to involve all the stakeholders” and that a lot of work would have to be done to meet that deadline.
The next seven months will be instructive in ensuring that the nation adjusts well to the introduction of VAT.
