Following its examination of the 2010 Budget Address presented By Prime Minister & Minister of Finance, Dr the Hon Denzil Douglas on March 23, 2010 the St. Kitts and Nevis Chamber of Industry and Commerce is now bracing itself for a major paradigm shift in the Federation’s tax regime, to be effected mainly via the introduction 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. The Chamber is aware that a VAT system has been the subject of much discussion and debate in national circles for some time. However, the Organisation 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. As such, while the Chamber realizes that VAT has been introduced in other OECS territories from whose experience we can learn, the Organisation 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. It must be appreciated that a new VAT system actually means that Government is now placing the major responsibility on the private sector of assisting it in tax collection. This is an undertaking which the business community has to take very seriously, as it (a) demands considerable investment in staff training, education, and appropriate computer software; and (b) forces the private sector to face serious penalties and fines if the rules and regulations of the VAT system are not followed to the letter. There were a number of other key concerns raised in the 2010 Budget for which the private sector would also be seeking clarification from Government. They are, among other matters: 1. Crime – It has been noted that an allocation of almost EC$47 million has been earmarked for national security – and this comprises one of the larger portions of the Federal Budget. While the Chamber is an advocate for proper investment in crime fighting, crime prevention and crime solving, we, like the rest of the public demand results. We are heartened By the fact that the Federation will be accessing the resources of a regional cyber forensics laboratory in Antigua & Barbuda. We also look forward to seeing marked improvements in crime solving and a reduction in crime in general, especially our homicide rate. 2. Retirement of Civil Servants Attaining Age 55 – The Chamber understands the need to make the civil service more efficient and productive. However, the Organisation also notes Government’s expectation that some retirees will be absorbed in the private sector or find self-employment via entrepreneurship. As such, the Chamber is interested to learn the number of civil servants who would have been retired By August 31, 2010, as well as some indication of their various areas of expertise and training in the event that any of them can be absorbed in the private sector which, By and large, also has to operate efficiently in the face of the protracted global economic crisis. 3. The National Debt – It is a well established fact that our national debt has been escalating over a number of years and that Government, in recent years, has been making some strides towards its reduction. With the advent of VAT it is the Chamber’s hope 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. Moreover, the Chamber also trusts that (a) Government will not be engaging in any major capital projects that will derail our debt reduction schedules; and (b) Government will engage in honest, forthright discussion with the people of this Country regarding any major projects that can potentially increase our already astronomical national debt. 4. Wage Freezes – It has been observed among Government’s austerity measures that wages will not be increased in the public sector. Given the state of the economy the private sector has been seriously contemplating similar cost saving measures. However, we trust that while these ‘belt-tightening’ strategies are being employed that Government will not be entertaining views towards legislating increases in minimum wages at this time – a move that would be detrimental to our Small and Medium Enterprise (SME) operators and our manufacturing sector in particular. 5. The SME Sector – It has been noted By the Chamber that not much attention has been given to the SME sector in the 2010 Budget. While we are happy to note that the Small Business Development Act was passed in late 2009, it is now an imperative that the SME sector receives the necessary assistance it requires to survive. As such, the Chamber appeals to Government to do all in its power to ensure that the National Entrepreneurial Development Division (NEDD) is fully operational in the shortest possible time so that small businesses can receive the well needed support infrastructure to develop and thrive. The full establishment of NEDD would also be an asset to some of those civil servants whom Government expects to retire in the next six months. There are a number of pressing issues regarding the economy which the Chamber is desirous of addressing with Government. However, as mentioned before, the major preoccupation at this time is the introduction and implementation of VAT. As such, the Organisation will be making representation to Government on these issues with a view towards working closely with the public sector for the good of the Nation. Source: St. Kitts-Nevis Chamber of Industry & Commerce
