CIC Concerned Over VAT :: The St. Kitts-Nevis Observer

The Chamber of Industry and Commerce is calling on the government to provide clarification on VAT, civil servant retirement and other issues contained within the 2010 Budget.

According to the CIC, the non-governmental organization is now bracing itself for a "major paradigm shift" in the Federation's tax regime due in large part to the implementation of Value Added Tax (VAT).

"While the Chamber realizes that the 2010 Budget does contain other austerity measures designed to address the grave financial strain in which our Country finds itself, it is the introduction of this consumption-based tax on goods and services that will demand the most adjustment, preparation and acclimatization in the short to medium terms."

A CIC communiqué states that it is imperative that VAT be implemented correctly from the onset and raised concerns over the time-line specified by Minister of Finance PM Dr. Denzil Douglas during his March 23 Budget presentation.

"The Organization is firmly of the view that while a VAT system of tax collection will be more broad-based and efficient to administer over time, there is much to be done - and done correctly from the outset. The Organization has serious reservations over the time-lines put forward by the Minister of Finance, insofar as the execution of massive public education, national consultation, passage of the requisite legislation, and actual introduction of the tax are concerned," the CIC said.

The CIC was concerned that under a VAT system the private sector would be forced to make considerable investment in staff training, education, and appropriate computer software. Another source of contention is that private businesses would "face serious penalties and fines if the rules and regulations of the VAT system are not followed to the letter". The CIC said with the advent of VAT the Chamber hoped that government's new cash flows will be properly managed with a view to "aggressively reducing the national debt which now stands at just under EC$3 billion".

The PM's announcement that as of September this year all civil servants 55 years and over will be forced to retire was also cause for apprehension. The CIC said in light of the shrinking economy and forced economical cutbacks being faced by the private sector, the organization was questioning how many persons are expected to be retiring from public serve and details of their skills set.

Other issues raised by the NGO included the government wage freeze, crime and the Single Market Economy. The Chamber called the issues "pressing" and said it would be making representation to government on these issues "with a view towards working closely with the public sector for the good of the nation".

During Friday's parliamentary session, PM Douglas addressed the CIC report and had harsh words for its president, TDC head Michael Morton. Morton had expressed concern about the VAT timeline and possible negative implications on private sector sales during the peak December stock turn over period.

"I saw a publication there from the present president of the Chamber of Industry and Commerce saying "the period for education consumers and business community, the window of opportunity to my mind is very very short". Well he must have been asleep; too much politics in his head that's why he don't understand," the PM said.

Douglas said talk of VAT had been circulating the nation for about 3 years and claimed the Ministry of Finance has had consultations with the private sector on the proposed tax system.

"So how come the Chamber of Industry and Commerce Mr. Michael Morton does not know? Mark forgot to tell him? They're all full a politics, that is all," the Prime Minister said.

As it related to Morton's hope that the Budget would have contained a stimulus package for the business community, Dr. Douglas said the government had already implemented stimuli packages over the past few years, most of which TDC had benefitted from.

"We introduced one stimulus package after another. We refused to take duties that we should have collected; we said let it be used to bring the prices of goods down. He was too busy in the PAM executive meetings planning to remove this government! That is why there is no credibility toward some people in the Chamber. No credibility whatsoever. Because this kind of nonsense he is writing and sending out there to the press. Whether somebody write it for him or not it is his words here. He must be asleep! The hotel section of TDC has benefitted from these (stimuli packages) yet he is saying we must give him stimulus measures; well then he must be totally asleep," Dr. Douglas declared.

Dr. Douglas assured that VAT would be the topic of widespread national discussion and consultation before it became effective on November 1.