VAT to be imposed after 2009 Elections, claims Opposition

By VonDez Phipps
Reporter-SKNVibes.com

BASSETERRE, St. Kitts – During his December 18 presentation on the 2009 Budge Address, Hon. Shawn Richards, PAM Representative and Parliamentary Representative for Constituency 5, claimed that the Budget “dances around the issue of the planned new tax, VAT” and opined that the statement made in its regard was merely “another empty promise”.

“The Minister hinted that VAT (Value Added Tax) is under consideration but dropped short of saying when it will be implemented. He went as far as to say it will not be implemented next year but I have my doubts. The truth is that this government is committed to imposing the new tax and it could be as high as 15%. Their plan is to spring VAT on the people only after they seek re-election in 2009; they have a desperate hope that the people would vote them back into office and only after that time would they spring VAT unto the people of this Federation.”

Richards indicated that the government’s income generation plan appears to be “predicated on hopes of earnings from the new tax” as the income from tourism and other key sectors are expected to decrease next year. He projected that the government’s approach for the upcoming fiscal year is to “tax and spend without any serious plans to create new wealth and protect the people from all the external economic shocks”.

During a recent interview with SKNVibes, experienced economist Sylvine Henry noted that in 2003, the Federation received aid from Caribbean Regional Technical Assistance Centre (CARTAC) through a stabilization programme in which projections were made in relation to the best possible way to ensure the nation’s stability. She added that the introduction of VAT was one of the major recommendations and she stressed that its implementation is inevitable. ~~Adz:Right~~

“It has to be introduced in 2009. In fact, the government has no choice but to. The more open the economy is, with the movement toward free trade arrangements, the closer the government moves toward introducing VAT. It was expected to be introduced in 2007 but the recommendations seem not to be done according to the CARTAC report which may yield undesired results.

“It has become a political situation where the government is hesitant as it may cause political suicide if VAT is introduced in time of such financial and economic crises. It may very well be introduced after next year’s General Elections because the government may not want to be accused of making life harder.”

The Chamber of Industry and Commerce has also indicated its hope that the Government will refrain from the introduction of VAT until “proper fiscal analysis, and wide-scale public education and consultation” are undertaken.  The Chamber also advised that when this tax is implemented, it should replace a number of other taxes in order to prevent double taxation.

However, Minister of Finance Hon. Dr. Timothy Harris indicated that the discussions of VAT are still in the investigative stages, and stressed that there have been no commitments made to introduce the new tax. He said there must first be proper preparation of the groundwork before VAT is introduced and reassured the nation that although the government will be giving “careful consideration to the possible introduction of VAT”, he is “pleased to advise that there will be no new taxes for the 2009 fiscal year”.

The economist, however indicated that based on her knowledge, the rates of VAT were already calculated and the major prerequisites in place for its implementation.