Antigua & Barbuda moves to abolish Personal Income Tax

Antigua & Barbuda’s Prime Minister Gaston Browne on Thursday announced that effective April, personal income tax will be abolished in its entirety.

Browne, who made the announcement in his presentation of the 2016 Budget, said this was a promise made to the people of Antigua & Barbuda during the election campaign.

“That was a major campaign promise, and this administration honors its word to the people. Promise made, promise kept. Abolishing Personal Income Tax is an important reform. Not only will it put more money in the pockets of the people, so that they can save or spend more for the benefit of the economy as whole, it will help to re-establish our country as one of the most competitive in the Caribbean and beyond.”

He said with the elimination of the income tax, EC$30 million (US$11.1 million) would be back in the pockets of the people.

“The cost of collecting personal income tax; the difficulty of enforcement; and its unfairness, with most of the self-employed not paying or not paying their fair share; make it sensible to remove the PIT from our books,” said Browne who is also finance minister. He noted that with this move, Antigua & Barbuda would be a location that is competitive and also the choice of retirees.

“Antigua & Barbuda will become a competitive location to attract the headquarters of companies and for professionals to relocate, thereby creating more jobs. Retirees will choose Antigua & Barbuda as their retirement home; more capital investors will seek to invest in Antigua & Barbuda over our competitors”.

“Concerning the loss of EC$37 million (US$13.69 million) in revenue with this decision, the elimination of personal income tax will be partially substituted by an increase in the Revenue Recovery Charge (RRC) from 10 percent to 13 percent, which is expected to yield an additional EC$20 million (US$7.4 million) in revenue.”

He added that all food items in the basket of goods would be exempt from this increase. “Therefore, to those who speak of the regressive nature of consumption tax, we say a little learning is a dangerous thing, taxing income is destructive to investment, savings and consumption. Also, it penalizes entrepreneurship.”

He said abolishing personal income tax would increase individual disposable income, not only for consumption but investment, and this is one of the necessary steps for mass wealth creation and income redistribution. “We expect a more buoyant and expanded economy to empower the government with increased revenues to fund the socioeconomic development of the masses.”

Regressive taxation must be considered in the context of the entire tax ecosystem; transfer payments and welfare support provided by government, including socialized health care, education and subsidized services. According to the Prime Minister, when all these measures are taken into account, higher income earners do pay the most taxes in Antigua & Barbuda.

He said based on this – additional measures will be made to compensate for any loss in revenue. These include the establishment of a Revenue Court, which will allow for the efficient and effective enforcement of tax collection; an adjustment to the corporation and business legislation and the introduction of the Unincorporated Business Tax Act.

A fourth measure will target the smuggling of alcohol and tobacco products into the country, which robs the Treasury of revenue. The Prime Minister also told legislators that a security Bond mechanism, utilized in several other countries, will be introduced and used to identify legally landed alcohol and tobacco products.

“These measures combined, will ensure that together with the three per cent increase in the Revenue Recovery Charge, there will be full replacement of revenue loss by the removal of personal income tax.”

Concerning the cost of fuel, Browne said as of February 1, his administration will reduce the price of gasoline and diesel.

“The price per gallon of gasoline will be reduced from EC$13.50 (US$5.00) to $12.50 (US$4.63), and the price per gallon of diesel will come down from EC$13.20 (US$4.88) to $12.20 (US$4.51).” -(CMC)