The debate concluded on Wednesday, (August 11), following closing remarks by the country’s Minister of Finance and Prime Minister, Dr. Denzil Douglas, who has described the new tax system as one that will affect the lives of the people for a very long time.

While introducing the relevant Bill in the St. Kitts & Nevis National Assembly on Friday 6th August, 2010, the Prime Minister explained that the new tax will be collected at each stage of production and distribution.

Seeking to explain the application of the VAT, Dr. Douglas told the parliament and the nation that, the Input (VAT) Tax will be paid on the purchases of businesses while the Output (VAT) Tax will be paid on sales to customers.

The fourth term Prime Minister argued that VAT will become a more reliable stream of revenue for the federal government and this would help his administration’s efforts to deliver more benefits to the youth, elderly and society generally.

He gave the assurance that his administration will seek to protect the most vulnerable groups in society and he urged local businesses not to use the opportunity to exploit the poor.

The Head of government pointed out that the “mark up” placed on goods and services should only be on the “value added”, not on the Input VAT paid to government. Douglas clarified that certain basic foods and services will receive special treatment to minimize a spike in prices.

In addition, protection is to be given to educational services because, said the Prime Minister, the government wants to ensure that the education of Kittitians and Nevisians is unabated, thus there will be no VAT on such services.

The Basic Rate for VAT has been set at 17% but some items will be zero rated while others, such as tourisms services, hotel accommodation restaurants and tours),will carry a reduced level of 10%. A list of items that will be zero rated has been prepared by government and these will include rice, flour, oats and selected baby supplies and foods.

Perhaps in response to concerns raised by members in the private business sector, government has agreed to provide technical assistance to ensure that companies are ready for the November 1st 2010 date of introduction. The Finance Minister made the argument that the VAT will not retard what he qualified as the continued progress and growth in the economy.

He confirmed that government will provided relief to businesses seeking to acquire the required hardware and software to upgrade their computer systems.

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