Although November 1st has been announced as the implementation date for the new Value Added Tax (VAT) system in the federation, the populace is no closer to knowing the rate at which it will be charged. Prime Minister Hon. Dr. Denzil Douglas spoke on the proposed tax system during his live radio program “Ask the PM” on Tuesday but offered no insight as to the VAT rate. “Let me emphasize that exactly what rate shall be put on the VAT is still to be determined,” he said. Dr. Douglas did say that consultation with the general public would soon begin. “Last Tuesday I was the beneficiary of a clear update as to where we are on the agenda and the time tabling for the introduction of VAT. What I think will be happening very shortly is the preparation for engagement of the general public is on its way.” He said public discussion would help determine what items would attract VAT and at what rate. VAT is usually levied in tiers- a standard rate, special rate, zero rate and exempted items. “We have three categories really of items and services. We have those which will be given a VAT, those which will have zero VAT and those which will have no VAT at all. So very shortly we will be engaging the public to ensure that we are at one in terms of how these items are to be properly taxed By way of VAT.” It has been widely speculated that a VAT standard rate of 15% will be introduced much like fellow OECS countries including Antigua & Barbuda, St. Vincent and the Grenadines, and Dominica. St. Lucia is currently at the public education stage of implementing VAT and Chief Economic Analyst of the VAT Implementation Project Unit, Fleur Simmons has indicated a proposed VAT rate of 15 %. Hotel stakeholders in St. Kitts-Nevis have expressed concern that too high a VAT rate might be disastrous for already flagging small hotels that would have to increase their room rates to offset the tax. In Dominica, St. Vincent and the Grenadines, and Antigua and Barbuda, a special rate of 10% VAT is applied to the hotel industry. PM Douglas has said that a VAT system would not mean increased taxes for consumers as it would replace 10 or 12 existing taxes including , Consumption Tax, Hotel and Restaurant Tax, Cable TV Tax, Traders Tax, Vehicle Rental Levy, Export and Rum Duty, Telecommunications Levy (IDD Calls) and Parcel Tax. “It [VAT] is going to be better for us. We don’t expect people to be paying higher taxes but we believe that more people who should be paying taxes but are not paying taxes at the moment, they will be brought into the tax net,” he explained. Dr. Douglas indicated in March that public consultation and education on VAT would begin in April, accompanied By the circulation of the White Paper, pamphlets, booklets and posters along with radio and television program and publications in the newspapers and on the internet. “The Tax Reform Team will conduct workshops and seminars targeted at specific interest groups, businesses and individuals. The team will also be available to meet with members of the general public to answer any question and address any concern that they may have.” The local Chamber of Industry and Commerce, while seemingly endorsing VAT, has expressed concern over the time-line for introducing and implementing the new tax system. “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. As such, while the Chamber realizes that VAT has been introduced in other OECS territories from whose experience we can learn, 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 Chamber said. Another concern being raised in the business community is the matter of tax returns, since personal end-consumers of products and services cannot recover VAT on purchases, but businesses are able to recover VAT on the products and services that they buy in order to produce further goods or services that will be sold to yet another business in the supply chain or directly to a final consumer.