The government of Antigua and Barbuda announced last month that it will be abolishing the jurisdiction’s personal income tax.
The levy, which had been in place since 2004, placed an eight percent charge on residents making more than $3,500 annually, and a 15 percent charge on those making more than $25,000, according to the Caribbean Journal.
Government officials said the tax cut will boost the country’s economic growth and regional competiveness.
“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,” Antigua and Barbuda Prime Minister Gaston Browne reportedly said.
Mr. Browne also said he expected the zero-income-tax policy to encourage companies, employees and retirees alike to relocate there, the Jamaica Observer reported.
He added that the income tax was “unfair” because most self-employed workers didn’t pay, and that the government struggled to collect revenue.
Campaign promise
The abolition of the tax was one of the ruling Labour Party’s campaign promises during the 2014 elections.
The move is expected to reduce government revenues by about $37 million, according to the Observer.
To make up for that revenue, the government plans to increase the revenue recovery charge – a tax imposed on goods imported into Antigua and Barbuda, as well as goods produced there – from 10 percent to 13 percent. That hike is expected to yield about $20 million.
However, the move to increase the revenue recovery charge has come under fire from Antiguan opposition members.
“When he argued … that he would abolish personal income tax, he did not say that he would increase any other tax,” said Harold Lovell, the leader of the country’s main opposition party, the United Progressive Party. “He said he would eliminate waste and by eliminating waste he would be able to abolish personal income tax. He has shown that at no time did he have confidence in his own words and that the theory that he put forward is a flawed theory, is a false doctrine.”
Debate on the increase in the revenue recovery charge was scheduled to start this week.
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