BASSETERRE, St Kitts (CMC) — The St Kitts-Nevis government is defending the decision to have a one-day Value Added Tax (VAT) Day instead of the two days in previous years.

Finance Minister Dr Timothy Harris said that the government had taken the decision to reduce the number of VAT-free days this year “in the context of the recalibration which we must do, in the context of renewed fiscal discipline, in the context of the reality that already for this year we have provided 100 million EC dollars (One EC dollar =US$0.37 cents) of concessions”.

Harris, who is also Prime Minister, said that as his administration moves to recalibrate the government’s agenda and its incentive mechanism, it is an area in which it wants the private sector to become more involved.

He said the EC$100 million in concessions provided so far this year “does not include exemption from corporate taxes to tax holidays. This is a significant contribution that the government has made”.

Harris said the government has been advised to cut back on the number of concessions that it gives to the private sector.

“…And we therefore have to be careful because this has been a source of engagement with the International Monetary Fund (IMF).

“The IMF has said repeatedly — and the Central Bank — that we have to look at our concessions system and whether or not they have become anachronistic in a new age where there should be a levelling of the playing field. We therefore have to be careful that we do not create too many inequities in moving forward,” Harris said.

Harris defended the government’s policy of having one VAT-free day, insisting it is the right decision at this time.

“VAT has already been removed from food, medicine, funeral expenses, which have brought substantial relief to consumers, especially those on lower incomes. There is no VAT on these things for 365 days of the year,” he said.

In addition, Prime Minister Harris said that, in considering the matter to give one VAT Day, Cabinet looked at the evidence where there were two VAT days last year but one of those days did not yield significant results because people didn’t have enough money to shop because it came before pay day.