Prime Minister of St. Kitts and Nevis, Dr. the Honourable Timothy Harris, said that in efforts to cushion the impact that the COVID-19 health pandemic has on the economy, the government will reduce Corporate Income Tax and Unincorporated Business Tax during his press conference Tuesday, where he unveiled the government’s stimulus plan to protect and support the people of the Federation against the coronavirus.
“(There will be a) Reduction of the Corporate Income Tax rate from 33 percent to 25 percent for the period April to June 2020 for businesses that retain at least 75 percent of their employees,” he said. “So this is a special and significant corporate tax reduction, intended to assist businesses whose social corporate responsibility is such that they will partner with the Government and with their employees and help to keep their work, at least 75 percent of them, during this period of difficulty.
“There will be an Unincorporated Business Tax, the rate will move 50 percent downwards from 4 percent to 2 percent for a period April to June 2020,” he added.
The stimulus package to reduce Corporate Income Tax and Unincorporated Business Tax is 5.8 million.
These stimulus packages are an addition to the current public assistance initiatives to protect the Federation’s economy from the impact of COVID-19, he said.
Special Emergency Wage Fund Set Up to Provide Relief to Employees
The government’s far-reaching stimulus package includes the postponement of the payment of Property Tax from June to September 2020; the removal of Value Added Tax (VAT) and Import Duty for six months on hygiene items such as hand sanitizers, hand sanitizer dispensing machines, disinfecting wipes, rubbing alcohol, gloves, masks and protective gowns, and the removal of Import Duty and Customs Service Charge for six months on vegetables, fruits, fruit juices, cough and cold preparations and vitamins.
Prime Minister Harris announced that a special emergency wage fund has been created to provide relief for displaced workers.
“Employees who contract the virus and for whom contributions were made would be eligible for Social Security benefits. The Social Security Board, in this regard, will establish a special fund of about $15 million to assist with income support up to a maximum of $1,000 per month for workers whose income would have been impacted by COVID-19,” the prime minister said.
Registered self-employed persons, who can show that they have been impacted, would also qualify for this support.
Prime Minister Harris extended his thanks, and that on behalf of the country, to the Social Security Board for responding in a very responsible way “by creating a package of support to mitigate the negative social and economic impact of the virus.”
“The Social Security Board, of course, was set up largely to support the workers or their beneficiaries in their times of greatest need, and such times include times of sickness, maternity, employment, infirmity and death. During these events our workers are most vulnerable and lose incomes and they suffer significant loss in income,” he said.
As the Government appreciates that quarantine forms part of the health best practice in response to containing and mitigating transmission of the virus, quarantined employees are expected to qualify for sickness benefits.
Government Injects $12 Million Into the Severance Payment Fund
The government has committed to the provision of additional resources in the region of $12 million to capitalize the Severance Payment Fund.
Prime Minister Harris noted the reasons behind the injection is that higher unemployment will place greater demand upon the Severance Fund.”
The Protection of Employment Act was originally passed in 1986. It was revised in 2002 and is now known as the Protection of Employment Act Chapter 18.27. The Act “makes certain provisions in respect of termination of employment; the establishment of a Severance Payments Fund; payment of severance payments to employees; and for other related or incidental matters.”
“When we inherited the Government of the country, the Severance Fund was in deep red and we have sought professional advice to determine how best we can make the fund stronger,” he said. “For the time being and in response to what is happening, the Government will put $12 million in the Severance Payment Fund to ensure that those who qualify for their benefits will be able to have them.”
The $12 million provided for the Severance Payment Fund is part of the approximately $120 million stimulus package response announced by the prime minister.