ST. JOHN’S, Antigua – Prime Minister Gaston Browne on Thursday announced a suspension of non-statutory tax exemptions, the widening of the Antigua and Barbuda Sales Tax (ABST) net, and an increase in property tax as his administration seeks to capture revenue that has been slipping through the cracks.
Browne, who is also Minister of Finance, announced the measures in his presentation of an EC$1.8 billion (One EC dollar = US$0.37) Budget to Parliament, noting that while there has been robust economic growth, there has not been a commensurate uplift in tax revenues, due to a combination of significant tax concessions and low levels of tax-payer compliance.
He said that in order to eliminate any possibility of wastage and to curb revenue leakages and ensure value is received for every dollar of public funds spent, his administration will reset the way public finances are managed.
“Over the next 12 months, we will pursue a series of revenue and expenditure reforms that will enhance our ability to deliver both timely and efficient service to the public, and to finance projects and programs to advance the social and economic wellbeing of all,” Browne said.
Among the reforms, he said, non-statutory tax exemptions will be suspended across the board. Where a strong case can be made for an exemption, only 50 percent of the import duty will be provided.
“The ABST, Revenue Recovery Charge and Environmental Levy must be paid in all instances. This is a necessary intervention to maintain expected tax revenues. Currently, nearly half of revenue assessed for collection by the Customs and Excise Division is exempted,” he said.
“Concessions are granted to help businesses – especially during the startup phase, to incentivize certain activities that are beneficial to the economy, and to provide relief to individuals in need. But, in order for the government to provide the goods and services, which all in our society rightfully expects, concessions will have to be strictly managed in 2023.”
Browne further announced that the ABST tax base will be broadened and its administration strengthened.
“Legislative adjustments will also be made to close loopholes that enable tax avoidance. Currently, more than one-third of ABST revenue is given away through tax exemptions alone. Again, we must rationalize the use of concessions and collect revenues so that quality social programs can be provided to the needy and critical public infrastructure can be funded for the benefit of the entire nation,” he said.
Additionally, the property tax rate will be increased from 0.3% to 0.5% on residential properties valued at EC$3 million and more.
The Prime Minister said the revenue generated from this measure will be used to help finance government’s urban renewal and national beautification initiative, which includes creation and maintenance of “green spaces” in the capital, St. John’s, and across the island.
Pointing out that Antigua and Barbuda has the lowest tax to GDP ratio in the Eastern Caribbean Currency Union, Browne asserted that if citizens want improved delivery of advanced healthcare, education, and essential infrastructure, “taxes must be paid”.
“By more efficient collection of existing taxes, and a reduction of non-statutory exemptions, additional revenues will be earned to enable government to do three critical things: meet its current obligations to domestic contractors and suppliers, and all creditors; ensure payment of pensions, wages, and salaries on time all the time; and accelerate the clearance of arrears on debt, thus improving creditworthiness,” he said.
In a budget presentation entitled ‘Reset, Recover, Revitalize’ that he said was focused on resetting the nation to recover from the lingering impacts of the COVID-19 pandemic and other global shocks, and revitalizing the economy “for the benefit of all”, Browne said his government will accelerate the programs and projects it started before the general election in January 2023.
He announced several public sector projects.
They include a US$70 million project at the VC Bird International Airport to bring about much needed upgrades and expansion at the facility to accommodate the already increasing flow of passengers. The investment will finance major capital works on both the terminal and the runway.
Browne said the Antigua Public Utilities Authority (APUA) will invest US$14 million in another Reverse Osmosis Plant to bring total daily water production to over 10 million gallons.
“Our administration is keenly aware, that although its considerable efforts have resulted in a marked increase in the production of water, APUA still experiences difficulties in distributing enough water to homes and businesses alike. My government has given clear instructions that this problem must be tackled effectively, fully, and swiftly,” Browne said.
His administration is also supporting the completion of a US$100 million Liquified Natural Gas (LNG) terminal and power plant, a joint venture between Antigua Power Company and an LNG producer from the United States.
Prime Minister Browne also announced that less than four years since the opening of the University of the West Indies (UWI) Five Islands Campus, his government and the Saudi Fund for Development have signed an agreement for a loan of US$80 million, the largest one-off investment in any campus in the 75-year history of UWI.
“This investment will help expand the physical infrastructure of the campus to meet the growing demand for access to tertiary education for Antiguans and Barbudans, OECS nationals, and students beyond our region,” he said.
“The project includes construction of student housing, teaching and research facilities, libraries, a sports complex, and administrative buildings, among others.”
The government will also complete the US$6.6 million Energy Resilience Project on Barbuda.
The works include undergrounding electricity transmission lines; reconnecting homes damaged during Hurricane Irma; installation of hybrid solar panels on public buildings; and adding 410Kw of generating capacity to support back-up power generation at the Green Barbuda Energy Plant.
Among the other projects on Barbuda is the construction of a new Multipurpose Centre, and rehabilitation of the Community Centre and Council Buildings.
These projects will all add to greater employment on Barbuda, and the opportunity for the development of small and medium-sized businesses to provide them with services.
Prime Minister Browne said his government has “an exciting opportunity” to forge a meaningful partnership with the African Export Import (Afrexim) Bank and will leverage that affiliation to explore support for infrastructure development, investment in tourism, establishment of an agro-industrial park, and recapitalization of regional airline LIAT.
The EC$1.8 billion Budget presented by the Finance Minister is 12.5 percent over the approved figure for the 2022 Budget.
The 2023 Budget will be partly funded by Total Revenue and Grants amounting to EC$1.13 billion, leaving a financing requirement of EC$676.7 million, which will be funded through securities issued on the Regional Government Securities Market (RGSM) and disbursements from Loans and Advances.
These amount to EC$351.6 million and EC$321.1 million, respectively.
An overall deficit of EC$70.9 million, or 1.3 percent of GDP is projected for 2023 along with a primary surplus of EC$76.6 million or 1.4 percent of GDP.
Browne said the projected fiscal outcomes for 2023 are an improvement over the estimated fiscal performance in 2022 and are aligned with the targets established in our strategy for fiscal and debt sustainability.