According to Caribbean360.com St. Kitts & Nevis is reducing its VAT from 17% to 5% on December 5 and 19 to stimulate consumer activity.
On Friday, November 29, 2013 Mr. Nigel Carty Minister of Information for St. Kitts & Nevis said:
“The discounted VAT days provide an opportunity as we near Christmas and the festive season for consumers of all strata of our society to purchase a range of goods at hugely discounted rates on the value-added tax. This, we believe will provide an opportunity for citizens and residents to make their usual extraordinary provisions for the Christmas and carnival-related activities.”
Apparently, when VAT was discounted like this in the past it “resulted in increased consumer activity with average daily sales of EC$13 million.”
This obvious political ploy confirms the fact that VAT is not a good tax policy and in fact it discourages economic activity.
One must hope that the policy makers here are being kept informed of matters like this so they might change course from VAT and institute the proper mix of economic and fiscal policies to help bring our economy out of the doldrums.
Improving the environment for investment is a good place to start in an effort to create jobs and help alleviate poverty.
Increasing the tax burden, possibly slowing the economy and government revenues even more, appears to be the wrong medicine for the country’s fiscal woes.
