Prime Minister Dr. Terrance Drew has issued a stern warning to merchants against price gouging following the implementation of a 4% VAT reduction designed to alleviate financial pressures on citizens. Speaking during the 7th January edition of The Roundtable, Dr. Drew emphasised that the government’s policy is intended to provide direct relief to consumers and stimulate economic growth.
The VAT reduction, which lowered the standard rate from 17% to 13%, took effect on 1st January 2025. Announced during the Prime Minister’s 2025 Budget Address last December, the measure is a key part of the government’s strategy to mitigate the impacts of global inflation and empower families and businesses by reducing costs.
Government’s Stand Against Price Gouging
Dr. Drew strongly condemned allegations that some merchants are increasing base prices to offset the VAT reduction, thereby depriving consumers of the intended savings.
“This behaviour is unnecessary and unacceptable,” he said. “Traders will benefit from increased sales as consumers have more purchasing power. Why not pass the savings on to the people? That is not fair, and I will not accept that.”
To address these concerns, Dr. Drew announced that Cabinet Secretary, Dr. Marcus Natta, will lead discussions with merchants and the Chamber of Commerce to ensure full compliance with the government’s policy. The prime minister also committed to personally attending some of these meetings to communicate the government’s position unequivocally.
Ensuring Transparency and Compliance
The Inland Revenue Department has provided clear guidelines on implementing the VAT reduction, which applies to the supply and sales of goods and services previously taxed at the 17% rate. Transactions will be subject to the new 13% VAT rate under the following conditions:
- When goods or services are delivered, completed, or made available.
- When an invoice is issued.
- When payment is received.
The government has pledged to enforce strict monitoring measures, supported by the recently enacted Consumer Protection Act, to safeguard citizens from unfair practices and ensure the initiative’s success.
Dr. Drew encouraged citizens, the Customs Division, and even the media to hold businesses accountable, urging them to report any instances of price gouging.
Empowering Citizens Through Sound Economic Policies
The VAT reduction, described as a “VAT Relief Holiday,” aims to reduce financial burdens and create a more favourable economic environment. The policy complements other ongoing government initiatives designed to enhance living standards, such as housing projects, wage increases, and targeted economic support programmes.
“This VAT reduction represents our government’s steadfast commitment to enhancing the quality of life for our people,” said Dr. Drew. “By reducing financial burdens on families and businesses, we are taking a tangible step towards a more prosperous future for St. Kitts and Nevis.”
As the policy unfolds, the government continues to call on businesses and citizens to adhere to the guidelines, fostering a spirit of collaboration that ensures the full benefits of the initiative reach the people of St. Kitts and Nevis.
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