BASSETERRE, ST. KITTS, APRIL 26th, 2016 – Parliament in the twin island Federation of St Kitts/Nevis will convene today, Wednesday, April 27th, at 10:00am to consider four pieces of legislation.
Prime Minister Dr. the Honourable Timothy Harris, in his capacity as Minister of Finance, will seek leave to introduce and have read for the first time the Income Tax (Amendment) (No. 2) Bill, 2016 and the BAICO (Plan of Arrangement) Bill, 2016.
Prime Minister Harris will move the second reading of the Tax Administration and Procedures (Amendment) Bill, 2016 and the Eastern Caribbean Asset Management Corporation Bill, 2016, which both had their first readings on March 23rd, 2016. Dr. Harris will also move the second reading of the Income Tax (Amendment) (No. 2) Bill, 2016.
Impact of the Bills that are to be read for the first time
The Income Tax (Amendment) (No. 2) Bill, 2016 seeks to amend Section 10 paragraph (l) of the Income Tax Act, Cap. 20.22, allowing businesses to claim tax deductions for salaries paid in excess of the current threshold of $75,000.00 per annum, all the way up to $90,000.00 per annum, the proposed new threshold.
Since 1982, the threshold was set at $60,000.00 per annum and, in 2012, the Act was amended to increase the threshold to $75,000.00.
The Government’s position is that increasing the threshold by an additional $15,000.00 per annum should stimulate economic growth and productivity. Whereas corporations could not take tax deductions for salaries exceeding $6,250.00 per month, the amended law would allow businesses to claim for salaries up to $7,500.00 per month. This would cover a lot more employees and also make way for companies to hire more skilled labour to complement the workforce.
The BAICO (Plan of Arrangement) Bill, 2016 seeks to provide a framework to aid in the resolution of the insolvency of British American Insurance Company Limited (BAICO) by means of a Plan of Arrangement proposed between BAICO and its creditors. Similar Arrangement Legislation was passed recently in other islands, to assist investors who are still reeling from the collapse of BAICO.
The bill states, inter alia, that, “The arrangement shall become binding on all creditors of BAICO wherever located, and on BAICO” and that, “Insurance Claims shall, after the costs and expenses of the judicial management or the subsequent liquidation of BAICO, have a first priority on the assets of BAICO, and shall rank above all unsecured creditors.”
In St. Kitts and Nevis, 555 policyholders have been paid a total of EC$3.1 million in Phase One of the payout. In Phase Two, 659 policyholders have been paid a total of EC$6.8 million.
In Phase Three, 220 policyholders were supposed to be paid a total of EC$6.6 million. A guaranteed threshold payout of EC$30,000.00 was set for persons who invested more than EC$30,000.00. However, only 107 policyholders were paid in Phase Three, resulting in 113 policyholders from St. Kitts and Nevis remaining to be paid a total of EC$3.4 million. (Trinidad and Tobago has only disbursed US$36 million of the US$100 million that it committed in July 2013 at the CARICOM Heads of Government Meeting.)
The BAICO (Plan of Arrangement) Bill would enable a percentage of the outstanding balances to be paid out to investors. Benefiting from the Plan of Arrangement would not preclude investors from participating in a class-action suit to recoup more of their money.