Tax Review Task Force recommends reduction in Personal Income Tax

ST JOHN’S, Antigua- The tax policy review task force set up last December is asking government to consider a reduction in Personal Income Tax (PIT) for different categories of income earners and to make up the revenue shortfall by increasing the Antigua & Barbuda Sales Tax (ABST) by 1 per cent.

The 24-member committee shared its recommendations with the public last evening at the Multi-purpose Cultural Centre, after press time. However, OBSERVER media was informed of the substantive recommendations before the consultations took place.

For taxpayers making between $3,000 and $15,000 a month, the recommendation is to reduce the tax rate from 10 to 6 per cent. For those making between $15,000 and $25,000 monthly, the rate would be reduced from 25 per cent to 15.

The committee will also recommend that government add two more categories of income earners for tax purposes: those grossing $25,000 to $35,000 monthly and those making $35,000 and above. They would be asked to pay rates of 20 per cent and 25 per cent respectively.

To pay for the decrease in PIT revenues the committee will ask government to consider an increase of ABST from 15 to 16 per cent.

Currently, only businesses making more than $300,000 in revenue per year are required to register to pay ABST. The recommendation is that government lower that threshold to $150,000 per year, thus increasing the number of taxable companies.

Other recommendations include reducing government taxation on allowances introduced last year and adding more deductions for PIT.

Committee Chair and Tax Specialist Neil Coates was a guest on OBSERVER AM yesterday when he announced that a reduction in PIT was a recommendation.

“There is a proposal to reduce Personal Income Tax; there is nothing on the table to remove Personal Income Tax,” he said.

“We have looked at it and in the current circumstances, we have made the determination to reduce the current rates and change up how the tax itself is being applied.”

Coates said current economic circumstances played into the committee’s decision-making. He added that he expects government to seriously consider what is proposed.

Leader of the Antigua Labour Party (ALP) Gaston Browne has been consistent in his pledge to do away with PIT entirely, if elected.

Browne concluded that government would not lose the entire revenue from PIT, which generated $43 million in 2012. He reducing PIT would leave more money in people’s pockets, and increased spending would drive up ABST revenues.

In July, however, a Ministry of Finance internal committee rejected Browne’s tax reduction plan, saying it was not plausible.

In a document, the committee concluded that the repeal of PIT would not only undermine government revenues but it would destroy the equity and sharing of the tax burden made possible by the progressive tax system.

The finance panel highlighted that the level of economic activity necessary to stimulate growth in the absence of PIT was simply unattainable. The panel said the economy would need to grow by almost 13 per cent to recover monies lost from removing PIT.

The public consultations will continue on Friday at the Multi-purpose Cultural Centre.

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4 thoughts on “Tax Review Task Force recommends reduction in Personal Income Tax

  1. Sio, we did not have PIT from 1977 to 2004 and Antigua was doing much better. Also check out some of the richest country in the world and tell me if they have PIT(Burmuda, cayman Islands, and Monaco). The only way to solve our financial problem is external revenue.(more tourist). What on earth are these university teaching people these these days.

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  2. That supply side application suggested by Gaston will not work in Antigua, the economy is too small, and would require growth rates never before seen in any of those islands.

    On the other hand I have a hard time believing that there are persons in Antigua, who are earning on payroll $25,000 -$35,000 EC per month. At current conversion rates ($2.70) that amounts to US $9,259-$12,963 or $111,108-$155,556. That’s in the 80th percentile of US incomes.

    Get your census data done and publish them before you begin to make tax policy. There can’t be that many persons in Antigua making that kind of money to generate any serious tax revenue.

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  3. I am curious as to what the objectives of these measures are. Is it to stimulate spending and investment by the higher income bracket? Is it to give lower income people a break? Increasing ABST will negatively imapact lower income people more than middle to high income earners. In addition, as a middle income earner myself, the suggested 4% reduction in PIT is of little consequence to me, a little more than $10 back in my pocket.

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  4. -Itz Election time again!!’. Only now r u figa out dat u need fi REDUCE the taxes?

    Cyan’t fool me agen Lovell. Vote fi U in 2004, Did notvote in 2009. Definitely will vote fi ALP this time…

    It’s like UPP have NO clue of what is going on in Antigua.

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