17% VAT in St Kitts to bring long term benefits: PM Douglas

Prime Minister Dr Denzil Douglas of St Kitts-Nevis is defending his government's decision to intruce a 17 per cent Value Added Tax (VAT) in November, saying it would put the twin-island federation in a better position than its neighbours.

The opposition People’s Action Movement has described as "excessive" the tax, which will replace 12 other taxes. However Douglas thinks the rate, which is the highest in the Eastern Caribbean, is reasonable and will bring long term benefits.

“We chose 17 per cent after a period of consultation at the local level and also after paying attention to the advice that we have received from the technical teams that have been working with the Government of St Kitts and Nevis," he told reporters.

"In fact, we have been told specifically that those countries which at the moment are at 15 per cent are going to be severely challenged because they may not have the additional space that is required to meet the ongoing challenges in this crisis,” he noted.

The 17 per cent VAT will apply to services and goods, while there will be a 10 per cent accommodation tax for the tourism industry.

Douglas said small shop-keepers and others with revenues of less than EC$150,000 (US$55,555) would be exempt from VAT.

And consumers will get a break too for items such as milk, infant formula, medicines for chronic diseases, bus fares and local produce.