Government announces plans to strengthen its fiscal resilience

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The government of Antigua and Barbuda has developed a comprehensive fiscal strategy document designed to strengthen public finances over the medium term.

This announcement was made by Prime Minister the Hon. Gaston Browne during the presentation of the 2021 Budget to the House of Representatives on Thursday.  He stated that fiscal strategy focuses on enhancing revenue performance, increasing efficiency in public spending, securing debt sustainability, and positioning the Government to meet its obligations in a more timely and predictable manner.

Key fiscal targets include:

  1. Primary surplus between 0.5% and 1% of GDP by 2023
  2. Overall deficit less than 1.5% of GDP by 2024

iii.      Wages and salaries accounting for not more than 9% of GDP by 2025

  1. Tax to GDP to increase to at least 18% by 2023 and be maintained at a minimum of 20% over the medium-term
  2. Debt to GDP ratio to fall below 70% by 2030

He said that while Antigua and Barbuda’s economy is the second largest in the Eastern Caribbean Currency Union, it has the lowest GDP ratio at 16 per cent.  He said that this is clearly a lop-sided system and it cannot continue.

“The practice of tax avoidance and tax evasion must and will be addressed.

It robs the majority of people of benefits they are entitled to enjoy, while a few gain greater individual prosperity.  It is not right; it is not just; and it cannot continue.  We have devised a number of policy interventions, that will stem the haemorrhaging of revenues through under-payment of a range of taxes,” he said

The country’s leader announced an end end to tax exemptions and duty-free waivers for anything that is not firmly linked to provisions under the law.  He said that revenues from property taxes will be improved by increasing compliance from less than 50% to 70% in 2021 and up to 80% by 2025.  Tax audits and improved tax administration, will cause a 15% increase in compliance for corporate income tax and unincorporated business tax by 2023.

“The decision has been made to gradually reduce total exemptions, to no more than 25% of potential revenue.  The Revenue Recovery Charge Act (RRC) will be amended in the first quarter of 2021, to limit the waiver of the 10% charge.   The House will recall that this measure was planned for 2020.  It was delayed due to the pandemic,” he said.

It was also announced that from March 2021, RRC exemptions will only apply in a few cases, including for current exemptions in the law for agriculture and fisheries inputs and equipment; medicines and pharmaceutical supplies; and entities with which the Government of Antigua and Barbuda has International Assistance Agreements.

PM Browne however stated that  while the law will maintain some allowance for waivers in support of business activity and major investment, such waivers will not exceed 50% of the applicable charge.

“Further, with effect from February 1, 2021, where the CIF value of imports is $10,000.00 or less, no exemption will be granted. The Tourism Accommodation Levy (TAL) will also be implemented in 2021. This measure was also planned for 2020 but had to be delayed.   It will now be instituted on May 1, 2021 and will fund the Climate Resilience and Development Fund,” PM Browne said.

This will be a special fund whose purpose is to finance projects and programmes that will build climate resilience, provide a fiscal buffer for public finances in times of natural disasters and economic shocks, and support development of our country.   The TAL along with a portion of the additional revenues yielded from the RRC, will be deposited to the Climate Resilience and Development Fund.

The TAL will be applied as follows:

  1. US$3 per night per guest for all room rates that are US$150 or less; and
  2. US$5 per night per guest for all rooms that are over US$150.

It is applicable to tourism accommodations including hotels, guest houses, apartments, AirBnB rentals, and villas.

The country’s leader also announced that his Government is considering amending the ABST legislation, to allow for the application of the ABST to online purchases, to include Amazon. The details of this initiative, he said, will be declared when the methodology for applying ABST is finalised.

The fiscal strategy also includes policies that will help to improve Government’s delivery of value for money, and ensure that Government spending on general operations, does not exceed the revenue generated on an annual basis.

“Some of the interventions include bringing the recently gazetted Procurement Administration Act into force by June 1st, 2021 along with accompanying procurement regulations;  maintain the wage freeze and continue to limit hiring except in cases where hiring is necessary; to achieve the objectives of the Government’s fiscal and growth strategy, or to deliver essential services; and reduce the rates now being paid to rent office space and equipment, as is being done all over the world as revenues rapidly decline,” PM Browne stated.

The government believes that these interventions will ensure that the tax yield does not fall below 20% of GDP – even then, it will be lower than in other Eastern Caribbean countries.

4 COMMENTS

  1. “… Government is considering amending the ABST legislation, to allow for the application of the ABST to online purchases, to include Amazon.”

    My question/comment:
    Seriously?!
    ABST and RRC are already included in the import duties and taxes which are applied when shipments of on-line purchases reach Antigua: import duties and taxes are applied based on CIF, Cost, Insurance, & Freight. This does not ONLY apply to merchants/retailers – it also applies to the small man in the street, the individual person who buys a cellphone, clothing, blow-dryer, or a pair of working shoes on-line and ships it to Antigua whether directly or indirectly, thru one of these businesses that handle cargo coming thru Miami via Amerijet or otherwise. Hence the reason, these businesses are insistent on shoppers providing THE INVOICES for their purchases beforehand.
    WHEEL AND COME AGAIN – WE DONE PAYING ABST THERE!!

    The PM mentioned that the rise of on-line shopping is affecting sales locally, thereby eating into the government’s revenues (of course I’ve paraphrased what he said).
    In my opinion, the focus needs to shift – the government ought to seriously and objectively, look into the prices which these wholesalers/merchants/retailers are charging for items on the shelves.
    ANTIGUANS MAY NOT BE A READING PEOPLE, BUT THEY CAN COUNT!
    Everybody and their dog/cat have cellphones and can see what merchandise cost overseas.
    With all due respect to you Mr. PM & the rest of your ilk: do any of you PERSONALLY go to do shopping in St. John’s?
    Have you seen the prices that the local merchants/retailers charge for the same items which we see and buy on-line for ‘peanuts’?
    Ever wondered why some of them do not want customers taking pictures of the items (and thus the price) on their shelves, going as far as putting up signs to that effect?
    Some of the items are marked up 200% & 300% and even higher …and I AM NOT referring to street vendors here!!
    Please tell me, how does an item which retails for US$7 ends up costing EC$50 and more?
    Or here’s a specific case, a soft-sided cooler bag which retails for US$8 in stores at Sam’s Club, USA, was being sold locally, in a major supermarket for EC$108 (US$40)…one of you brilliant readers, please work out that mark-up.
    Since, “Harris get 2.70 for 1”, the rate of exchange between the US$ and the EC$ has been fixed for decades…THERE IS QUITE SIMPLY NO WAY TO JUSTIFY THE HIGHWAY ROBBERY ANTIGUA’S RESIDENTS FACE EVERY TIME THEY GO TO THE STORES AND SUPERMARKETS…
    Keep in mind that the local wholesalers/retailers/merchants, who are purchasing in bulk from abroad are very unlikely to be paying the retail price for their bulk purchases!! And even if they do, they can still do a whole lot better with their end pricing. And don’t tell me that they have to pay ‘freight costs’ and all that BS, because we also have to pay those costs for our purchases…
    DEAL WITH THAT FIRST AND SEE IF THE SITUATION DOESN’T CHANGE!!
    STOP SQUEEZING THE INDIVIDUAL CITIZEN TO BENEFIT THOSE GREEDY WHOLESALERS/MERCHANTS/RETAILERS. THEY CAN DO BETTER!!
    Then if that doesn’t work, thoroughly investigate EXACTLY where the REVENUE LEAKAGE is occurring, because I guarantee it is NOT ON THE CONSUMER END… IT IS VERY RARELY THE END USER THAT IS CHEATING THE SYSTEM!!
    When people have two little pennies to spend, they have to try to get the most value for those pennies.

  2. It is becoming more and more apparent, we need to get rid of the current govt as it continues to use us for their creative enrichment scheme.

    Where are the murderers for Nigel Christian?

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