The Value Added Tax (VAT) was implemented – at a rate of 17 percent – on 1st November, 2010, as a revenue generator for the government. As a part of that VAT machinery, businesses generating revenue in excess of a certain amount, were required to register and would collect 17 percent tax from their customers, which is to be passed on to the government by a specified time.
During the most recent of his monthly press conferences – which was held on 14th April, 2011, – Prime Minister and Minister of Finance, Dr. Denzil L. Douglas, when asked by the media about the performance of VAT, explained that success has been realised.
“The VAT was introduced because we wanted what we considered a much more equitable indirect taxation system. We believed it was going to broaden the net and in broadening the net, it would collect more; in collecting more, it would then help to stabilise the financial situation as a result of the economic situation that we are facing. To date, the VAT has met with our expectations…I can say to you that it is performing as we anticipated in the sense that we believe it has broadened the net and we believe it is collecting what we expected to collect.”
Asked specifically about the sums of money which have been collected as a result of VAT, Dr. Douglas indicated that figures will not be provided until the VAT would have been applied for a six-month period and an assessment would have been completed.
“We will not release any figures at this particular time. We did say that we would wish for it to run for at least six months and then we would take a full assessment of the situation. This is because it has started in November, it is at the end of the tourism season and then it peters off and so we want to see what it will be like over the full six months period. We will not release any figures until after the first six months assessment has been done.”
In a post-Cabinet briefing dated 10th January, 2011, Cabinet informed the public that it was experiencing difficulty with collecting the VAT from some businesses which had not filed nor paid the VAT they collected from consumers, to the Inland Revenue Department.
In another post-Cabinet press briefing dated 21st February, 2011, the VAT team was applauded for its “excellent leadership it has been bringing to the coordination of the implementation and monitoring of the new tax system”. It stated however, that a number of challenges were still being experienced including “the need to ensure a high level of compliance among business sector operations.”