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Antigua Government presents tax-free budget

Friday, January 24, 2014 | 7:28 PM    

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ST JOHN’S, Antigua (CMC) — The Antigua and Barbuda government has presented an EC$874.8 million tax free budget to Parliament announcing also a reduction in the rate of personal income tax and the payment of outstanding arrears to public servants.

“This anticipated 15 per cent increase in revenue over the expected actual revenue out-turn for 2013 will not be achieved through any new taxes or tax increases,” Finance Minister Harold Lovell told legislators Thursday, insisting that the Baldwin Spencer administration had no intention of increasing taxes to meet the fiscal package.

“I repeat this administration has no intention of introducing any new taxes, nor will we increase any existing taxes,” Lovell told legislators.

He said the growth in revenue will be as a result “increased economic activity in 2014” adding that a number of projects would be implemented during the 12 months.

“The growth in revenue will be a result of increased economic activity in 2014 as implementation of a number of projects I highlighted earlier commences; the revenues generated through the Citizenship by Investment Programme; and continued reforms in the tax administration system that will bring about increased compliance,” he added.

But in an immediate reaction, Opposition Leader Gaston Browne described the fiscal package, titled “The New Economy” as unoriginal.

He said the budget contains a number of “plagiarised initiatives of the Antigua Labour Party” recalling that even the theme of the fiscal package had been taken from a previous statement made by “our late father of the nation” Vere Bird Sr.

In his budget presentation, Lovell said that the government, which is facing a general election later this year, anticipates that indirect taxes would account for EC$484.8 million.

He said the Antigua and Barbuda Sales Tax (AVST), which accounts for 46 per cent of indirect taxes here, was estimated for the 2014 to be EC$224.4 million.

The government estimates it will make $60 million from the Citizenship by Investment (CIP) programme that Lovell said “will bring about increased compliance”.

Lovell told legislators that the Baldwin Spencer government would be reducing the rate of personal income tax for the lowest band while increasing the personal allowance threshold for tax-free income.

According to the finance minister, employees earning between EC$3,501 to EC$15,500 a month would now be charged eight per cent instead of the present 10 per cent.

He said the level for tax- free income would also move from EC$3,000 to EC$3,500.

“The first EC$3,500 would be taxed at zero per cent. This means that every dollar up to EC$3,500 earned by all workers in Antigua and Barbuda will be free of personal income tax,” Lovell said, adding that the new measure came into effect from the start of the year.

The government said that the new policy would mean more than 4,000 people would be taken off the income tax list and Lovell said the government expects to lose an estimated nine million dollars in tax collections this year.

Last year, employees paid EC$42.5 million in income tax.

“Rather than increase other taxes or cutting social programmes, as would be inevitable if we were to abolish income tax, we will improve compliance across all tax types, in particular, property tax.

“In order to finance that loss of nine million we will only need to grow the economy by 1.72 per cent, that is very, very realisable,” Lovell said.

The government also said it intends to meet its obligations to pay more than EC$100 million in outstanding arrears to public servants.

It said that while negotiations have restarted, it would begin making payments for salaries owed in the period 2000 to 2002.

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