Owen: Go VAT

BASSETERRE, St Kitts – Former Barbados Prime Minister Owen Arthur has described the Value Added Tax (VAT) as the best option for the region in the age of trade liberalisation. “We are living in an age of trade liberalisation. What it means specifically, if you take that concept and break it down, is that to be part of a Caribbean Single Market and Economy [CSME], we have to remove import duties on goods coming from the rest of the Caribbean, and also all Caribbean countries that are part of the CSME have also to reduce their top rate of import duties from 45 per cent to 20 per cent to implement what is called the Common External Tariff,” Arthur said.His comments came at a seminar in St Kitts where the government there inches closer to implementing the Value Added Tax (VAT). He explained that “in order to compensate for the loss of that revenue” Barbados introduced the VAT in 1997.“But subsequent to that the region has become more and more deeply involved in relationships that require the removal of import duties,” the former Prime Minister said. “Recently we entered an Economic Partnership Agreement with Europe which is about now to take full effect because it had a three-year grace period. What that EPA involves is removal by the region and economies like St Kitts/Nevis of import duties of goods coming from Europe that historically have carried an import duty. “The region is also negotiating similar arrangements with Canada and I would imagine that other countries would sooner or later ask the region to put in place new trade arrangements with them.“So in the age of trade liberalisation, countries that have historically depended on import duties for a large part of their revenue now have to remove those import duties ,and you have to replace them with something,” he added.Arthur, who was adamant that he was not trying to get involved in the domestic politics of this country, said that he was “surprised that it has taken you so long because you are subject to the same forces in St Kitts/Nevis as we are in Barbados that warranted the introduction of the Value Added Tax”. He said one positive of the VAT was that countries could target the implementation to free exports to make their economies more competitive.“You can also target it to allow the sectors that you feel are areas of activities that are worthy of exemption from taxes to be exempted from taxes,” he said. (CMC)