Increased minimum wage, VAT relief & more as PM Drew presents over $1.127B budget

Prime Minister Dr Terrance Drew presented a whopping $1.127 billion budget on Monday, the biggest passed under his 2-year-old administration.  

One of the major budget announcements has been the increase of the minimum wage by $70 starting from July 1, 2025. PM Drew said that the current minimum wage stands at $430, and an increase to $500 will enhance the consumer earnings.  

During the address in the assembly, Prime Minister Dr Drew also said the budget for fiscal year 2025-2026 aims to make the economy of St Kitts and Nevis more stable, and resilient.   

Prime Minister further emphasized that the new budget was only announced after careful discussions and recommendations from economics experts, and key stakeholders.  

Other major highlights of the budget include VAT relief, Budget Boost Wallet initiative; extending Building and Materials Reset till December 2025 among others. 

Temporary VAT relief 

As part of the budget 2025, the Government has allowed for first six months of 2025 as the VAT relief holiday. 

PM Dr Drew, who is also the finance minister, said the VAT rate will be charged at 13 per cent during this period instead of the standard 17 per cent.  

“This VAT Relief Holiday will ensure more in your pocket, empowering families to better manage their expenses while maintaining their quality of life,” said PM Drew. 

Budget Boost Wallet initiative 

Under the newly announced “Budget Boost Wallet”, eligible individuals earning EC $5,000 or less a month will be given direct financial relief through a monthly offering of EC $250 for the first six months of the new year.  

As part of this, the Government is aiming to spend over $33 million in six months. Prime Minister referred to this initiative as “giving it back to the people”. 

“We want to extend this help for a period to give people an ease and to make it broad-based because we do not have unlimited resources,”. 

He further added that the extra money could be used for essential buying, including household items and paying of bills.  

“As a caring government, we believe it is only right to give back to you, the people, to help ease the burden of rising living costs and put more in your pockets,” Drew added.  

Digital transformation & skills development 

One of the key objectives of the Government is to improve education and enhance workforce training using investments in digital transformation, Drew added. He further said the government plans on utilising Vocational Education and Training (TVET).  

In that direction, Prime Minister Drew laid out upgrades aiming for the Advanced Vocational Education Centre (AVEC), with an emphasis on applying cutting-edge technology to its training programme.  

“The 2025 Budget will facilitate significant upgrades at AVEC, including the integration of immersive simulators such as a welding simulator and painting simulator which utilise Virtual Reality (VR) technology to simulate real-world training experiences while promoting the efficient use of resources,” Drew announced.  

Prime Minister Dr Terrance Drew further stated that the technology is designed to shorten the learning curve and enhance operators’ skills. He added that the technique will increase productivity, decrease energy consumption by 50 per cent, reduce waste of consumables, and wear on real equipment, and reduce accidents.  

He further added that in 2025, upgrades to AVEC will also include the outfitting of smart classrooms to enhance the teaching and learning experience. 

Renewable Energy 

Prime Minister stated that transformative advancements in the renewable energy sector are also their top priority. He added that this would aid Government in aligning with it’s Sustainable Island State Agenda, and support the transition to green energy, reducing food import bills while promoting economic diversification.  

Extending Building Materials Reset  

Prime Minister further announced to extend the "Building Materials Reset" as part of this no import duty or customs fee will be charged on the building materials.  

He also announced to reduce VAT by 13 percent on such materials. Prime Minister further added that this will help first-time homeowners with a mortgage up to EC$500,000, and also to those who wish to renovate their homes.  

Notably, this has been done as part of the "Independence 40 Reset" which was unveiled in September 2023. 

Improve Border Security  

The government also reaffirmed its commitment to make border security arrangements stronger and facilitate travel through an Electronic Travel Authorization (eTA) System.  

The eTA system, which will be rolled out in 2025, is a modern, digital solution to give travellers planning to enter St Kitts and Nevis through designated ports a pre-arrival authorization.  

Besides eyeing national security, the initiative also aims to boost the Federation's local economy by making travel to the federation a seamless exercise.  

“As we strive to secure our borders and facilitate safe, seamless travel, it is imperative that we embrace modern solutions that align with global best practices,” Drew, who is also the Minister of National Security, said.  

“When you can just come off of a plane, we have all of your information here so you can just walk and all the information is collected,” he said, adding, “This is going to help to add to our revenues here in St. Kitts and Nevis.” 

The Labour prime minister added that the eTA system supports the government’s mission to safeguard the country while leveraging technology to support tourism, the backbone of the local economy.  

Public Reactions 

The public has given out their mixed reactions on the Fiscal 2025-2026. Many have welcomed the new programmes, and initiatives while several seems less convinced.  

 “Initiatives are great but making sure that they actually work as intended for the many and not the few would be greater. Making sure the staff who deliver these services are properly trained, and unbiased and impartial, to the people receiving the services,” added a netizen. 

Another said, “It seems as if some people wanted all the banks in their pockets and if they don’t get it everything wrong they just want want no need God help us.” 

One person requested the PM to reduce the VAT rate even down to 10 per cent. “Hon. Dr. Terrance Drew Please revisit your statement and take down that VAT to 10% for GOOD! It's killing us the POORER class,” she said.  

The temporary reduction in VAT, along with other financial decisions such as the Budget Boost Wallet initiative, is expected to boost consumer earnings.  

Drew also said that to protect people’s savings, his government recently passed the Consumer Protection Act and other relevant laws that will keep a vigil on businesses to curb unfair practices.  

He also said the strategic decisions will help minimize the effect of inflation. 

In April this year, citizens of St Kitts and Nevis capitalized on a reduced VAT Rate Day by buying goods at a discounted rate which the government aimed at to boost economic activity. 

Previous Year’s Budget 

Last year, the Government had presented budget under its theme, “Marching Forward on the Journey to a Sustainable Island State”. The Appropriation (2024) Bill, 2023, was to the tune of EC $1.1 billion, which was an increase of around $80 million compared to the budget presented the year before.  

In his budget, PM Drew unveiled financial incentives aimed at benefiting the common man.  

The plans included, among others, the setting up of a Financial Education and Savings Programme, investment in shares of state majority-owned firms and comprehensive financial education topics for youth, eight per cent hike in salary for civil servants besides a 50 per cent salary bonus for civil servants, GAEs (government auxiliary employees), pensioners and STEP (Skills Training Empowerment Programme) workers.