St. Kitts – Nevis VAT Issue Still Up IN The Air

Basseterre, St. Kitts – Nevis
November 16, 2007

The Government of St. Kitts and Nevis has not made a decision about introducing a Value Added Tax (VAT) as suggested in certain quarters, but residents have been promised that they will be involved in any discussions on the matter.

Minister of State for Information the Hon. Nigel Carty told scores of young people at the National Youth Dialogue held earlier this week that a number of regional countries including Guyana, Antigua and Barbuda and St. Lucia have implemented a VAT.

He noted that government remains committed to having a simple and fair tax structure that is designed to make revenue collection more efficient. Minister Carty added that a VAT is one possible measure under consideration that could serve to eliminate any nuisance taxes.“We get a lot of revenue loss by having so many different agencies collecting so many different taxes,” the Minister of State explained. “And so we are going to engage the public in a discussion about whether or not the VAT would be good for St. Kitts and Nevis in the future.”

Consultations on the matter would be in keeping with government’s policy of involving stakeholder/public feedback on various national issues.

The VAT is reportedly functional in more than 120 countries worldwide, many of which are in the Caribbean. Economists and financial analysts have written that the VAT is non-distortionary or neutral with respect to economic activity because it is broad based in scope. As such, there is no incentive to alter the allocation of resources which means relative prices will remain the same.

Further, the VAT taxes consumption not savings and therefore can have a stimulating effect on savings as well as on investment.

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