The government is proposing an increase of up to two percent of the Antigua and Barbuda Sales Tax (ABST) to repay state debts and to implement a 14% increase in public servant salaries that Cabinet approved this September.
Prime minister Gaston Browne recently hinted at a maximum 2% hike from the current rate of 15%. He said while a final decision will be made next week, he believes it is the best way to increase the government’s annual revenue.
“We will be faced with increased obligations to cover the increase in pay to public servants … and that’s gonna cost us nearly $40 million and I’d say the most reliable way to probably ensure that that is paid is to increase the ABST by two per cent,” he said on Pointe FM over the weekend.
Browne defends the proposed increase, citing the need to cover increased obligations, including the salary hike for public servants, road repair and expansion, and existing state commitments such as the maintenance of the UWI Five Islands campus and repayment of an $80 million Saudi loan.
Residents are not in favour of the possible increase, complaining that prices at the supermarket are already high and the cost of living seems to be increasing each week.
The opposition United Progressive Party (UPP) has called for mass consultations to discuss the possible increase which they said was announced in an “offhand” manner.
The party insists that residents should have a say in such a significant financial decision. They’re concerned that in the absence of such consultations, any decision made unilaterally by the administration could have serious consequences.
“It cannot be right for the Administration to make a decision with such serious financial implications unilaterally – especially at this time when so many workers and their families are unable to make ends meet,” a press statement read.
The opposition pointed to the economic challenges facing the country, including high unemployment and under-employment, and argues that increasing taxes without proper consultation is not the solution to the government’s financial woes, which they attribute to excessive borrowings, delayed payments to suppliers, and stalled projects.
They say residents should demand that no taxes be increased without wide-ranging consultations. The UPP warns of potential mass protest if the government fails to collaborate on this issue and any future tax increases.
The official decision is expected sometime after Wednesday when the weekly Cabinet meetings are usually scheduled. The decision comes ahead of the December 5 budget presentation where the government will outline its expected income and expenses for the next fiscal year.
In October, the government said it had no intention to introduce new taxes, it did speak of improving tax collection. Currently, the government is collecting about 16 percent of its revenues from taxes.
What is ABST?
ABST is a consumption tax applied to imports and is included in the final price the consumer pays for goods and services.
ABST abolished six other taxes – Consumption Tax, Telecommunication Tax, Hotel Guest Tax, Hotel Guest Levy, Hotel (bed-night) Tax and Restaurant and Catering Services Tax – when it was introduced in 2006.