No new taxes announced in St Kitts and Nevis budget
BASSETERRE, St Kitts, Wednesday December, 14, 2011 –No new taxes will be introduced here, at least for now, Prime Minister Dr Denzil Douglas has announced as he yesterday presented an EC$400.9 million (US$148.4 million) budget for the 2012 fiscal year.
Instead, he said, concessions will be reviewed as well as taxes that are already on the books to boost compliance and generate more revenue.
The subsidy on Liquid Petroleum Gas (LPG) will be phased out from next year, he declared during his three-long presentation that was boycotted by opposition lawmakers.
He explained that the subsidy costs the government over EC$4 million (US$1.48 million) annually.
“…This subsidy cannot go on forever and we will begin to phase this out from 2012. We will also continue to examine the fee structures for the services which government provides and ensure that these fees adequately cover the costs which we incur to provide these services,” he stated.
The Prime Minister who also serves as Finance Minister said the practices and procedures for administering the Value Added Tax (VAT) in the tourism sector will be assessed following reports of serious non-compliance.
The government also plans to pass a new Corporation Tax Act next year, close “certain loopholes in the current Income Tax Act” as of January 1, and improve the administration of the Excise Tax system.
Dr Douglas told legislators that revenue foregone through concessions for 2011 will amount to an estimated EC$110 million (US$40.7 million).
“We believe that before we can introduce new taxes we should try to rationalize the current exemptions with a view to improving our revenue intake. To this end, in 2012 we intend to undertake a complete review of the exemptions which still exist on the Customs Service Charge to ensure that they are all in line with legislation and policy,” he said.
During his presentation, Dr Douglas said his administration has once again cut back substantially on recurrent and capital expenditure for the new fiscal year to maintain fiscal stability.
At the same time, he told legislators there are a number of critical services such as education, health, safety and security and social assistance that his government must deliver on.
“Careful attention has therefore been taken to provide adequate resources to ensure that the quality and scope of these services are not in any way compromised,” he said.
According to Dr Douglas, recurrent revenue for 2012 has been estimated at EC$401.3 million (US$ 148.6 million), which is EC$31.6 million (US$11.7 million) below the 2011 Estimate of EC$432.9 million (US$160.4 million).
Recurrent expenditure, excluding loan principal payments, has been pegged EC$400.9 million, which Dr Douglas said is EC$398.9 (US$147.7 million) or 0.1 per cent less than the 2011 Estimate of EC$401.3 million (US$148.6 million).
Dr Douglas said the measures introduced in the fiscal package have taken into consideration the loan agreement that the country entered with the International Monetary Fund into earlier this year.