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SKN Prime Minister says he has no intention to increase taxes where not necessary


by Kevon Browne

St. Kitts and Nevis (WINN) – The Federation of St. Kitts and Nevis is still in a state of economic recovery. 

The tourism industry is climbing to pre-pandemic levels, the Citizenship By Investment Program has seen changes to meet international standards, and the government is building out of the agriculture, sports and creative economies to diversify our economic drivers and the job market. 

All of these are moves by the government to stimulate our economy and would take considerable time and financial investment.

Prime Minister, Hon. Dr Terrance Drew, previously reported social assistance programs costing the country EC$250 million (25-30% of the current budget), the government continues granting concessions for the private sector at the ports, rising food prices are hurting the pockets of people, and there is a minimum wage increase that remains unknown as the various stakeholders consider how much and when it should be implemented.

With those in mind, what is the government doing to increase its revenue in the short/medium term?

The International Monetary Fund (IMF), in its January 2023 report, questioned the Federation’s revenue generation apparatuses with suggestions of increasing taxes or returning personal income tax. 

While the IMF did not suggest cutting off the social assistance programs, despite being unsustainable, the programs should be used to stimulate economic growth, which was a recommendation of the financial body.

The Prime Minister noted the feedback from changes to some social assistance programs in attempts to make them more sustainable, saying, “We said we cannot just cut people; we can have some changes taking place, we can tighten up the programs, but we cannot cut the programs. Even [when we tightened up] the programs, you see that we have gotten a backlash. You see what has happened [with] persons who think they should get a program and [are] not on a program. Because… they are interpreting that they should be on a particular program, and I respect their position. However, economically, we are being told that this is unsustainable, but we have taken the position not to just throw our people off, and so we have kept the programs fundamentally intact, as a means of testing  and to streamline them.”

The Prime Minister said that the government is focusing on opportunities to expand the economy.

“There are some recommendations that we are not considering at this point in time that you would have mentioned. However, what we are saying is that we are looking for opportunities to expand the economy, for example, tourism. You see that we are dealing specifically with international airlift to bring more tourists into St. Kitts and Nevis. We are also looking at regional travel to have more expansive regional travel so that we can have more people in St. Kitts and Nevis. We are looking at if we can get one or two more hotels to have more beds here in St. Kitts and Nevis. That is why we expanded the Music Festival. That is why we are having Concacaf. That is why we want the CPL. That is why we are looking at the film industry. That is why we are looking at creating St. Kitts as a hub where conferences can be held, where big events can be held because those things help you to expand your tourism industry and, of course, will bring in more revenue.”

The Prime Minister continued, “That is why we are talking about [25 by 25]. If we can cut the import bill by 25% by 2025, we’re talking 10s of millions of dollars be saved here in St. Kitts and Nevis. That is why we want to go to renewable energy because fossil fuel and diesel – those are costing us a lot at this particular time, and if we were to go to renewable energy, it will be much cheaper. So we are looking to cut our expenditure through renewable energy, which will be cheaper, to the 2025 agriculture plan to cut our food import, to expand the tourism industry, to use energy as a sector, [and] the creative industry as well. So what we’re seeking to do is to create what you call a “Sustainable Island State” premised on renewable energy as the new source – geothermal – that is why we moved ahead with the Nevis Island Administration. That is why we’re moving ahead with the solar projects, and we have renegotiated those and positioned those we hope people can have “buy-in” to them.”

A precarious position is what the Prime Minister called our current situation considering the suggestions by the IMF.

“If you have to follow every rule, or everything said that we should do the social programs, which are costing us a quarter billion dollars presently, that is 25 to 30%. People are complaining, but what I want people to understand is the precarious position we are in with respect to our revenues and with respect to the social programs in terms of their sustainability.”

The Finance Minister reported that the country had record-breaking collections at the Inland Revenue for June 2023 with surpluses; the National Bank recorded a mid-year profit after a deficit for the last financial year. Social Security is now making more than it is paying out in claims.

However, there are still financial strains to contend with in the Federation.

“However, there are situations we have to deal with, for example, inflation. We have put the cost of living task force together to deal with the cost of living. We continue to subsidise electricity in the millions of dollars, millions of dollars, and so all we are asking our people is to go to the SKELEC. Have a discussion with SKELEC so that you can, you know, have a favourable position with them. Don’t just ignore it, even though we’re subsidising in the millions. So I want our people to know that we are spending subsidies on the ELEVATE Program, subsidies on the [PAP], the STEP program and electricity, and we will continue to subsidise water, concessional school goods. We kept the corporate income tax down at 25. We didn’t increase it back to 33. The non-incorporated tax is still at 2%. We didn’t increase it back up to 4%. So the government continues to do a number of critical things to protect our people. [Are] people still having some difficulties, of course, because this is post-COVID and we continue to recover, we continue to build, and we are moving in the right direction. So I want our people to know that as well.”

Despite the cost of running the social assistance programs and other financial strains being felt by the people of St. Kitts and Nevis, the Prime Minister said he has no plans to burden the people of the Federation with any increases in taxes that are not necessary.

Once successful, the plans to expand the economy will have long-standing positive effects on the Federation’s financial standing. 

However, the returns on those investments will take years to feel. 

The current economic situation of the Federation has the masses questioning what can be done now to help ease existing burdens. 

The short answer is the continuation of social assistance programs, concession for the private sectors and the people on bringing in goods, encouraging individuals’ investments in wealth creation and continued efforts for immediate foreign investments.


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