No new taxes in St Kitts-Nevis 2005 Budget

St. Kitts and Nevis Prime Minister Dr Denzil Douglas
Photo: Erasmus Williams)

Wednesday, February 23, 2005

BASSETERRE, St. Kitts: Kittitians and Nevisians breathed a collective sigh of relief on Monday, as Prime Minister and Minister of Finance, Dr Denzil Douglas delivered a tax free budget to a packed National Assembly.

Not only were there no new taxes and levies, but, fuel surcharges passed on to consumers were far less than anticipated. The entire country was bracing for an astronomical increase in petrol and liquefied petroleum gas, given the fact that the St. Kitts and Nevis Government was the only Caribbean administration still absorbing the global increases in fuel prices.

Speculative rates quoted by Opposition spokespersons ranged between $8:50 and $9:50 per gallon of fuel. But Prime Minister Douglas set the new price at the pump at $8:30 a gallon, still significantly lower than several other regional states. The price of LPG gas was adjusted to the more realistic price of $30 for the 20 pound cylinder and $140 for the 100 pound tank.

The non-imposition of new taxes was a major relief, as it came on the heels of a public realization by the Government that something significant had to be done about the debt situation in the country.

The Prime Minister himself has admitted on several occasions that the national debt needs to be checked, but, he said the work of the Inland Revenue Department had seen a steady increase in revenue collections and therefore the government saw no need, at this time, to increase taxes as a means of meeting debt obligations.

The Prime Minister and Minister of Finance said debt was a definite problem and challenge for the government, but it was not out of control since the asset base of the government and country was still relatively strong and therefore could easily attend to the medium and long term challenges of the country.

He said further that an aggressive approach would be taken to privatizing some state assets, so as to generate much needed non-tax revenue.

Another highlight of the Finance Minister’s three hours and fifteen minute presentation carried live on radio and television and via the internet was the shift in stamp duties payable on the purchase of land from the buyer to the seller.

This was a major inhibiting factor to several persons purchasing and owning properties as commercial banks have tended over the years to disregard financing the tax component of land and property transactions.

Many persons who previously could have secured the funding for the purchase price of a property ran into difficulties coming up with the tax component. The shift announced by the Prime Minister would enable the buyer, in which category the majority of Kittitians and Nevisians fall, to go to the bank or financial institution with one price and therefore stand a much better chance of securing the necessary loan.

Dr. Douglas’ package also included the removal of Entertainment Tax in respect of shows, concerts, performances and other similar events in which the performing artists are all nationals of the Federation, resident at home or abroad, or nationals of other countries who reside in the Federation.

The 2005 Budget spoke also of a removal of the Environmental Levy in respect of any motor vehicle that is two years old and under. This measure is widely viewed as the commencement of the dismantling process of that particular tax, as speculation is rife that the Minister of Finance will for the next few years increase the age limit of the earmarked vehicle by one year until such time as the tax is no more.

Another adjustment, which drew nods of approval from persons assembled in the public gallery of Parliament, related to the increase in Customs Service Charge applicable to persons and entities importing goods and enjoying exemption from Import Duty and Consumption Tax.

The Minister of Finance thought it only fair and just to ask those who were benefiting from waivers to contribute a little to the increasing cost of administering the service, rather than further burden those who were carrying the brunt of import bills in the country.

Not surprisingly, the Prime Minister and Minister of Finance frowned once again on the notion of a re-introduction of Personal Income Tax, stating that his party, the St. Kitts-Nevis Labour Party, was opposed fundamentally to such a tax and furthermore that it considered the existing Social Services Levy, which was introduced by the previous Peoples Action Movement Government, as a disguised form of income tax. He said this government had no plans of tinkering with the salaries of workers, at this time.

Interestingly also, was the announcement that St. Kitts and Nevis would be proceeding apace with provisions for the freeing up of work restrictions on nationals of CARICOM countries.

The Prime Minister announced that the Cabinet of Ministers, at its meeting of February 21, decided that, with immediate effect, no national of a CARICOM country who is duly recognized as a University Graduate or a media worker or a sportsperson or an entertainer or an artist would be subject to deportation or be denied the right to live and work in St. Kitts and Nevis.

This of course does not apply in situations where such a person has committed a criminal offence or any act, which under the Caribbean Community Skilled Nationals Act, 1997 would disqualify that person from obtaining residency in St. Kitts and Nevis.

Moreover, Cabinet also agreed that by the end of April, 2005, it would put in place all the necessary administrative and legal procedures for the full implementation of the provisions of the CARICOM Treaty in relation to the freedom of movement of persons and the provisions of the Caribbean Community Skilled Nationals Act that was passed in the National Assembly in 1997 and amended in 2002.

The Prime Minister added that over the next few weeks, the government will increase its contact with stakeholders in public education and information sessions, so that all concerned would become more familiar with the procedures that need to be followed in the processing of applications from Caribbean nationals who wish to reside and work in the Federation.

Budget 2005 did not evoke any signs of displeasure on the streets of Basseterre yesterday, because residents feared worse. They feared that a chunk of the salary increase they received last year would have been taken away. But, Prime Minister Douglas said in his summary that he wanted residents to maintain the standard of living to which they had become accustomed and that he wanted to ensure that the gains that were made over the past ten years were not removed or reversed.

Easy passage of this measure through Parliament is expected later this week, not withstanding the fact that the opposition People’s Action Movement will predictably find a basis on which to criticize the package. Observers will be listening with interest to see whether the new Opposition Member for Sandy Point will raise his level of debate from the cut and thrust of party politics and rise to the standard expected of a Member, seated in the highest forum in the Land.

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