BASSETERRE, St. Kitts – WIDESPREAD consultation regarding the implementation of a Value Added Tax (VAT) is expected to pick up shortly following the official launch of the White Paper in early May.
In his April instalment of monthly press conferences, Douglas informed that the White Paper was approved by Cabinet on Monday (Apr. 19) and gives a more detailed schedule for the implementation of VAT.
“The publication of the White Paper will be followed by approximately 30 days of consultations and we are hoping to launch this White Paper on May 6. The first reading of the bill will be followed by the public reaction and comments necessary to issue in the second and the third readings, after which the bill becomes law," Douglas said.
“Let me emphasize that with the launch of the White Paper, it begins the discussion in the country on the VAT rate, those goods which are to be exempted, [and] those goods which will have zero-VAT.
"Changes, additions, deletions [to the White Paper will be made] based on the consultations. We will then have the first reading of the bill and then we will have further discussion and debate. Then we go back to Parliament with the support of the discussion groups that we would have had and have the second and third readings,” he added.
Contents of the White Paper include an overview of registration, zero-rated and exempt supplies and payments and refunds related to VAT. It also addresses the treatment of selected sectors under the new tax system and issues of implementing the consumption tax. To date, there has been no information from the government suggesting a possible rate of taxation.
Consultations are expected to engage a wide spectrum of groups and individuals including the media, healthcare professionals, banking, insurance and financial centres, the hospitality sector, schools and colleges, real estate and construction specialists and wholesalers and retailers.
Special emphasis was placed on the need to consult with consumers and business associations. After having taking the public’s views into consideration, Douglas noted that everything should be in place for the implementation of VAT in November 2010.
The proposed VAT schedule has come under fire from private sector organizations including the St. Kitts-Nevis Chamber of Industry and Commerce and the St. Kitts-Nevis Hotel and Tourism Association, as they argue that six months will not be sufficient to educate their members and make changes in preparation for the new consumption tax.
In response, Douglas opined that such concerns are “premature” because the consultative and public awareness process is yet to be completed. He added that if public appreciation and understanding of how the new tax will work is unsatisfactory at the end of the scheduled six month period, then the time may be extended to ensure a seamless VAT introduction.
“Even if it is so that enough time has not been given, we give time. I don’t see this being an issue at all, but we must first go through the exercise. The government has the right to set targets; it has set a target. We will work towards that target and if we fail to meet the outcomes at the end of that target time, we extend it. For now, it is the time that we have set,” Douglas said.
Legislation is expected to be passed by the end of May, but the set 30 days of consultation may delay this part of the process to early June.
