Value Added Tax (VAT) will be implemented in St. Kitts-Nevis by November, according to Governor General His Excellency Sir Cuthbert Sebastian.

During his delivery of the Throne Speech on Wednesday's convening of parliament, Sir Cuthbert said the new tax system would be implemented later this year following extensive public consultation.

"My government will rationalize our tax system by abolishing a wide range of indirect taxes and replacing them with a comprehensive value added tax. Work has already commenced with respect to the implementation of the value added tax and the Ministry of Finance will spearhead over the next few months a major public consultation and education exercise to clear the way for the introduction of VAT by November of this year," he announced.

In August last year Prime Minister Hon. Dr. Denzil Douglas endorsed the implementation of VAT as "the way to go", a benefit to the taxpayers and country instead of the perceived encumbrance and increase in taxes paid.

"We want to make sure that our people understand what VAT is, to understand that this transaction based tax in particular will bring enormous benefits to not only those collecting the taxes but also those who are paying the taxes; and also to dispel the false notions that it is another tax that will burden people. I put my political career on the line by saying it will not be a burden, in fact it will lighten I believe, the burden of taxpaying that we have in place now. It is something that is designed to help."

He had promised extensive consultation with the private and public sector on their prospective roles in the new tax system since the introduction of VAT would require a reform of the current tax system.

"There are important issues that need to be resolved before we can talk about implementation of VAT. We have some difficult situations that need to be tackled first between St. Kitts and Nevis because the authorities are recommending that there be one common jurisdiction of the implementation of this. Nevis in a way, collects its own taxes and if you are going to have the VAT collected and shared between the entities, how best is it to have this done."

In other Caribbean countries where VAT is implemented, it replaced several existing ones including Consumption Tax, Hotels Tax, Restaurant (food and beverage) Tax, Telecommunications Tax, Sales Tax, Entertainment Tax, Airline Ticket Tax and Motor Vehicle Purchase Tax.

It is levied on most goods purchased for general consumption and all services including doctor's visits, rent, consultations, salon services, banking transactions, and in the food and beverage and hotel industries. VAT could range from 15-20% of the cost of goods and services.