Sunday, November 14, 2010

Drat the VAT

Happy Monday everyone. So yesterday was a 1/2 day rainy book-reading day, and a 1/2 day sunny beach day. Not bad.

Unfortunately, some cruise ship passengers didn't have such a good time here over the weekend. For the first time ever in St. Kitts, a busload of tourists was held-up. Not a good way to start the tourist season. I'm guessing that the fall-out from that is not going to be good. The police may not do anything, but I think the populace are getting fed up. Most businesses had a really bad off-season and were counting on this in-season to pick themselves back up. It's about time the people do get fed-up. The island's small. Someone knows who's doing this. Do tell! If the cops or customs agents are involved in any way, they should get double the penalty.

I wonder if that cruise ship is jinxed though. Last year, a concrete dolphin gouged a huge hole in the side of the ship.

So now you've got upset tourists and locals. The locals are not only upset about the growing crime, but also about this stupid VAT (Value Added Tax - even the U.S. keeps tossing it around - although all their experts say it's a bad idea). Everyone's confused (including the businesses charging it) and it's become a topic of conversation at all the bars. Anyway, here's a quick correction:

Let's start with electricity. The last a lot of people heard, the VAT would be charged on wattage use over 150 watts - which meant as soon you flipped a switch. The SKN VAT website says that the tax won't be charged "as specified in regulations." What the heck does that mean? A news article quotes the Minister as saying that the VAT won't be charged because they're going to raise tariffs (which brings back that 85% increase we're all so worried about). So we wait.

Then rent. The VAT website doesn't mention rent at all, but Liz from Pereira Tours alerted me that properties bringing in just under $100,000EC in income have to charge. I did find this article that said commercial properties and timeshares bringing in over $96,000 had to collect, but is our unit considered a commercial property? All residential rent is excluded from VAT. I emailed our property manager and she said that the argument is definitely what defines a commercial property vs. a residential one (and she is in a battle with the government). What would make our unit "commercial"? The fact that it's got a property manager? Our unit was sold by the developer and is owned by one individual who is collecting solely from us. He's not clearing $96,000EC from us, so should not have to collect. Of course, I don't know who owns the land under this unit...An extra $250US/mo hangs in the balance for us if VAT gets applied to rent...So we wait. Anyone renting here, might contact their landlords and see what's what. The government seems to be adding up properties too - so if your landlord happens to own several properties around the island whose income add up to $96,000 he collects VAT.

Restaurants only need to charge 10% VAT, but their vendors are charging them 17%, so guess what's happening? We paid $6EC for a beer on Friday instead of $5...

So we wait and see how this all pans out. We, and others, just might get priced off the island. Boo. St. Kitts certainly has the right to charge for the privilege to live here, and if you've got the money to afford it - great. There are many times, we still can't believe we live on this beautiful island (despite its problems). Unfortunately, our particular income level might force us into a change of scenery. We hear Phuket's cheap...