Roughly 10,000 people are to benefit from the move, according to a release from the office of Prime Minister Dr Timothy Harris.
“There is a sense of optimism for thousands of local households that can now better manage competing obligations this Christmas (such as renovating their homes, purchasing new furniture and other household durable items, making charitable donations, etc),” the release said.
Harris, who made the announcement on Saturday said that the Cabinet of Ministers had taken the decision the day before, “to ensure that all share in the economic fortunes of our beloved country”.
“The Ministry of Finance will work with the CFBC and other governmental agencies to make this happen.
“We estimate that potentially EC$30 million will be pumped into the economy as a consequence of this bonus by the government.
“The multiplier effect of this sum will be significant at this time of the year. As the principal beneficiaries of consumer expenditure, we hope that our private sector firms will do more than the normal pay for their employees,” he added.
The country saw a positive multiplier effect from the removal of the 17 per cent value added tax (VAT) on food, medicines, educational supplies and funeral expenses in April 2015, the release said.
Last year ended up being a banner year in St Kitts and Nevis, with the Discounted VAT-Rate Day generating record sales and demand for consumer durables such as automobiles and furniture reaching a peak, it added.
Meanwhile, Harris also announced that there would be “further assistance to boost economic activity and make life easier for the lower and middle income families” this Christmas season.
This assistance is to come in the form of duty-free concessions, for the first 400 pounds, on gift packages of food items and a duty-free allowance for travellers of EC$540 (US$200) off the CIF [cost, insurance and freight] value from Friday, December 9 to Saturday, December 31.