BASSETERRE, St. Kitts – ONE year and months after the implementation of the Value Added Tax regime in St. Christopher and Nevis, Prime Minister and Minister of Finance, the Right Hon. Dr. Denzil L. Douglas has informed that the federal government collected $133M in VAT (VAT) revenue during the first year of enactment.
He made the announcement yesterday (Jan. 25) at his first monthly press conference for 2012, which was held at the Parliamentary Lounge, Government Headquarters, Basseterre.
The Finance Minister explained that when VAT was implemented in November 2010, it was projected that a total of $128M in revenue was expected to be generated from the scheme ($24M in Nevis and $79M in St. Kitts). He informed that the projected figures for both islands were exceeded.
“…Actual VAT revenues have also exceeded projected VAT revenues. In Nevis, for example, we had projected some $24M in vat revenues for 2011. The amount actually collected however was $29M, some $5M more than that which was projected. Similarly, in St. Kitts we had projected $79M in VAT revenue for 2011 fiscal year. The amount actually collected however was $104M, some $25M more than that which was projected.”
In December 2011, the government instituted what was known as “Black Thursday”, where for that day alone (Dec. 22) customers purchasing items would only be required to pay seven percent VAT as opposed to the normal 17 percent.
And according to Dr. Douglas, “some $12.8M in sales took place at seven percent VAT…and the government returned to customers through this reduced VAT some $1.004M”.
Describing VAT as a mechanism which “is critically important (in keeping) the machinery of government turning over”, Dr. Douglas highlighted some of the areas in which the generated revenue would be used.
“What we are going to do with the VAT revenue? As we have been doing, pumping it back into the country, making sure that teachers are being paid, hospitals are open, our children can get their hot meals when they go to school, the school books are available, they can get their uniforms, their examination fees will be paid…That’s what it is going to be used for. It’s not even enough, but that’s what it will continue to be used for; used by ensuring that the services of the government and the investment we are making in our people continues…”
Many have expressed their concern about a possible increase in the VAT while hoping for a decrease in the percentage. The Finance Minister noted that the current 17 percent is not fixed and while it could increase or decrease, a number of factors would determine whether it does or not.
“Seventeen percent is not permanently fixed, because this is a government that monitors. It monitors, it assesses, it does analyses and then it makes decisions. When we introduced VAT, it was supposed to be 17.5 percent, seriously... but despite the difficulty in calculation, I said let us ease a little bit, but most countries would have been 17.5…
“I would love to do everyyear what we did on that wonderful (day). It was a great day (Black Thursday) for us, for the people, because we were able to return some of the vat that normally would have been collected. So it is not fixed and I would love to see it reduced to 15 and I am hoping it won’t have to be increased to 17.5.”
