BASSETERRE, St. Kitts – DISSENTING views toward the implementation of a Value Added Tax (VAT) have been growing ahead of the November 2010 deadline, and Leader of the Opposition Hon. Mark Brantley continues to express his concerns about the new tax.
Speaking at the St. Kitts and Nevis Chamber of Industry and Commerce (CIC) 28th Annual Private Sector Banquet, Brantley painted a bleak picture of the domestic economy and argued that the introduction of VAT comes at a very unfortunate time.
“It [VAT] could not come at a worse time for the average man and woman in St. Kitts and Nevis who are now experiencing untold hardship with an ever increasing cost of living. The timing is also curious, coming as it does just one month before the traditional Christmas shopping period which many business leaders here assembled look to for their annual surge in sales.
“It may well be that VAT will dampen the already low enthusiasm for shopping and thereby restrict the potential for robust Christmas sales,” the young Nevisian lawyer noted.
With less than four more months remaining on the calendar, Brantley opined that the “rushed implementation” of the new tax would likely lead to widespread VAT evasion.
The new consumption tax is set to replace about 10 nuisance taxes and will be introduced in November, following a widespread public awareness and education campaign.
This programme was off to a late start, but the publication of a VAT White Paper, ongoing training in a number of relevant government offices and the first reading of a VAT Bill have set the stage for much public discussion.
Brantley however maintains that introducing VAT at this time could have the effect of further dampening the economy rather than stimulating it. He cautioned policy makers that an increase in taxes at this time could only worsen an already bad economy.
“VAT is a direct consequence of unrestrained fiscal imprudence over the past years. VAT is now touted as a saviour to rescue us from certain fiscal peril but...[VAT] may not be the panacea for the economic ills we face, and may well retard economic activity further,” he added.
Not only will VAT bring a dramatic increase in the administrative costs to the government and local businesses, but, according to Brantley, it may also force the poor to pay more as a percentage of their income than the rich. The potential hardship that can be a result of this is “far too great” for ordinary citizens, Brantley argued.
VAT will be much more effective if introduced at a moderate rate at a time of economic upturn. Until then, Brantley suggested that the government should continue to support developments in tourism, alternative sources of energy, offshore universities and financial services and the construction sector.
These, he explained, are sure to stimulate economic growth and development.
