Nevis, West Indies. ?A Non-Tourist-Trap? Blog About Nevis.

Basseterre, St. Kitts – Nevis
June 20, 2010 (CUOPM)

Several Eastern Caribbean leaders will place a new dimension in Caribbean integration when they formally sign a treaty establishing an economic union of the Organization of Eastern Caribbean States (OECS).

St. Kitts and Nevis Prime Minister Hon. Dr. Denzil L. Douglas, the outgoing Chairman of the Authority of the Organisation of Eastern Caribbean States (OECS) is among the leaders in Castries, St. Lucia for the signing of the OECS Economic Union Treaty.

The ceremony begins at six o clock on Friday 18th June and will be carried live on ZIZ Radio and television.

“We have a date with history,” OECS Director General Dr. Len Ishmael told the opening ceremony of an exhibition entitled “No Borders, New Frontiers: Discovering the Potential Within,” referring to the historic signing of a revised OECS treaty on Friday

That is when leaders of six independent member states of the grouping will put their signatures to the revised Treaty of Basseterre establishing the OECS Economic Union.

The OECS Director General notes that current and emerging global and other challenges point to the need to reinforce the resilience of member states to ensure their survival.

According Dr. Ishmael, the global economic crisis pointed to the strength that comes from the institutional architecture of this region.

She says it is this and other reasons which point to the wisdom of moving forward within a framework of even deeper union.

However St. Lucia’s Prime Minister Stephenson King warned that the road to economic unity, though creating better opportunities for the people of the sub-region would not be easy.

Related posts:

1. Montserrat Will Not Sign OECS Economic Union Treaty
2. St. Kitts – Nevis To Host OECS Economic Union Treaty signing
3. OECS Economic Union Treaty Signing Well Represented
4. OECS Leaders To Discuss Economic Union
5. Nevis Premier To Attend OECS Treaty Signing

Basseterre, St. Kitts – Nevis
People’s Action Movement
May 31, 2010

The ongoing discussions around the soon to be accomplished implementation of the VAT reveal several troubling issues that are bound to worsen an already difficult transition.

This first problem is the inevitable deceit that characterizes the government’s approach to the implementation; beginning with the ludicrous assertion that the current discussions being organized by the Ministry of Finance are actually consultations. As has been pointed out in this and other media, a White Paper is a policy document that outlines what a government will implement. {A Green Paper is a document of ideas and proposals to be discussed and chosen or discarded during consultations} The White Paper is therefore a fait accompli describing exactly what will happen. It should cause a case of déjà vu as people recall the “consultations” on Electoral Reform. After spending millions of dollars on local and international joyrides, the government did exactly what it had always intended in its White Paper.

So, with scarcely eight months to prepare the country will be launched into a new system of taxation without an anywhere near adequate amount of preparation or education. The ideas being pushed by this government that the VAT will not affect the cost of living, will replace existing taxes, will significantly increase government revenue and will not impair the functioning of small businesses are all assertions that can only be categorized as divorced from reality.

The cost of living

The experience of our CARICOM neighbours with the implementation of the VAT has been an initial increase in the cost of living by at least 50%. In fact, this is so common that it is internationally accepted as an integral part of implementing a VAT and the reason for advising governments to give a population at least two years of preparation and education before switching to a VAT. The rise in the cost of living is compounded if a VAT is introduced when an economy is in serious trouble like is the case in St. Kitts and Nevis. When customers face bills for everyday items like groceries and car insurance increased by 20% when they are unemployed like many here are they will try to buy much less. As demand falls the economic will shrink further and the much needed recovery inevitably delayed.

Will replace existing Taxes

The most seductive idea being pushed by the government is that twelve taxes will be removed and so, the implication is, the tax burden will be lessened. The reality is that each of the taxes that will be removed will be replaced by the VAT. This means that the 3% tax on IDD telephone calls will go to 20% (or whatever the VAT will be). The same will apply to all the other taxes and since only the Consumption Tax is currently above the expected rate on 20% at 22.5% all others will experience significant increases.

Will significantly increase government Revenue

A VAT has one purpose which is to enhance government revenues. The current revenue crisis in the Federation has two main causes, firstly the large scale pilfering of government funds for private use whether from siphoning off money from capital projects or simply diverting it into personal accounts {Lex Consulting LLC}. The other is the large scale avoidance of tax obligations mainly by businesses. The scandal of many strong party supporters failing to hundreds of thousands of dollars in electricity bills is one example. According to the Ministry of Finance tax compliance hovers around 60% which is quite low. The benefit of a VAT is that consumers will be unable to avoid it so that money will be collected but it will also induce even more people and businesses to cheat as was the problem in Greece which is now is so much turmoil. An already low compliance rate will fall when businesses are required to pay VAT on credit purchases before receiving any money themselves and inevitably many will under report earnings.

Will not impair the functioning of Small Businesses

The United States does not have a VAT at the moment ironically because times are hard now and that would make things worse. The VAT there is expected by about 2014 after the economic recovery is established. This means that the current accounting software used here will have to be replaced with much more expensive European systems. This will mean more cost. Smaller businesses will have to hire accountants to ensure that they are keeping proper records which will mean more costs. All this added cost will have two effects increases in price and reduction in staff.

The vicious cycle of hardship causing more hardship will be further fuelled.

Related posts:

1. Nevis Premier Discusses Economic Outlook
2. St. Kitts – Nevis Recuurent Revenue Up 13.8%
3. St. Kitts – Nevis Predict Strong Economic Growth In 2008
4. St. Kitts – Nevis To Implement A Value Added Tax VAT
5. Nevis Premier Discusses Economic Stimulus Package

Information Minister – Nigel Carty
Photo By Erasmus Williams

Basseterre, St. Kitts – Nevis
May 12, 2010 (CUOPM)

The St. Kitts-Nevis Labour Party Administration is committed reducing public sector debt, turning around deficits, and achieving greater macroeconomic stability over the short to medium term.

Minister of Information, Sen. the Hon. Nigel Carty said that although small and large economies around the world have been hard hit by the current economic crisis, the Federation’s economy will return to growth in the medium term, and macroeconomic stability will be bolstered, particularly assisted by the implementation of several initiatives.

The commitment has come from St. Kitts and Nevis Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas during a presentation to the Cabinet following a debriefing by an International Monetary Fund (IMF) Team that visited the twin-island Federation from April 7th to May 7th.

The Team carried out its legal obligations to the Federation of St. Kitts and Nevis by conducting an Article IV assessment of the macroeconomic status of the country and had important policy dialogue with officials in the government and other stakeholders during a debriefing session on Friday May 7 at the Cabinet Meeting Room.

Present at that meeting were: Division Chief of the IMF, Arnold McIntyre and other economists from the IMF; Tom Hockins, IMF Director for Canada, Ireland and the Caribbean; Sir K Dwight Venner, Governor of the Eastern Caribbean Central Bank (ECCB); the Deputy Governor and other officials from the ECCB; Elliot Murphy of the Caribbean Development Bank; Hubert Perr and other officials from the European Union; Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas and Ministers of the Cabinet; Federal Financial Secretary, Mrs. Janet Harris and other officials from the Ministry of Finance; Premier of Nevis and Minister of Finance, Hon. Joseph Parry; Deputy Premier Hon. Hensley Daniel and Financial Secretary for Nevis, Mr. Laurie Lawrence.

In his Post Cabinet Briefing, Minister Carty reported that Prime Minister Douglas remains committed to reduce spending through a number of initiatives.

“Important among these are Tax reform, through the implementation of the value-added tax by November of this year; Corporatisation of the Electricity Department with a view to increasing operational efficiency and responding more effectively to the fluctuating price of fuel on the world market; Aggressive pursuit of our debt management strategy through the Debt Management Unit at the Ministry of Finance with EU support for an experienced consultant and reduction in expenditure on personal emoluments by reducing the public sector size through natural attrition and generally freezing salary increases for the time being,” said Mr. Carty.

He also stated that the Cabinet will review of its concessional regime to ensure a more effective application of government’s policy of assisting businesses and spurring investment through the extension of tax concessions.

“All signals indicate that, although small and large economies around the world have been hard hit by the current economic crisis, the Federation’s economy will return to growth in the medium term, and macroeconomic stability will be bolstered, particularly assisted by the implementation of the preceding initiatives.

Related posts:

1. St. Kitts – Nevis VAT Talks Will Be On Two Levels
2. St. Kitts – Nevis Government On Value Added Tax
3. National Registration Discussed For St. Kitts – Nevis
4. St. Kitts And Nevis Economy Growing According To IMF
5. St. Kitts – Nevis Government To Fine Price Gougers