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Today’s Top Headlines




Anguilla Announces Tax Measures For 2011

by Phillip Morton, Investors Offshore.com

31 December 2010

Announcing tax measures for the forthcoming year, Anguilla’s Chief Minister, Hubert Hughes, in his third 2010 budget, said that the government’s continued fiscal consolidation efforts are going a long way to balancing the territory’s recurring budget deficit.

A record deficit of XCD66.2m in 2009 was slashed to XCD36.9m during 2010, Hughes announced, assisted by a fiscal consolidation programme which included a reduction in civil service salaries by 5%, cuts in outsourcing and internal purchasing budgets, and cuts in welfare. Substantial cuts to the number of civil servants, of up to 30%, as required by the UK Foreign and Commonwealth Office, are planned for 2011.

On the revenue side, the government has implemented a 7% Communications Levy, increases in customs duty on specific items, and an increase in the Customs Surcharge to 3%.

Revenue for 2011 is budgeted optimistically at XCD177.68m, an increase of XCD41m on that expected to have been collected in 2010.

New revenue streams, as detailed by Hughes in his latest Budget, are expected to generate XCD21.3m. The tax measures are:

  • An increase in the tax rate of Property Tax from 0.0015% to 0.00375%;
  • The implementation of a 7% levy on the sale of petroleum products, such as gasoline and diesel at the retail level, as announced previously;
  • The introduction of an Interim Stabilization Levy at a rate of 3% on the gross income of employees, to be matched by the employer. Self-employed persons will be subject to a 6% rate on earnings;
  • Marginal increases on various licences, namely driving licences, liquor licences, food premises licenses, and villa rental licences; and
  • An increase from 1% to 3% in the Customs Administrative Surcharge.

In his budget speech, Hughes stated:

“In accordance with basic economics, increases in taxes during a downturn could be counterproductive. Madam Speaker, it must be reiterated that the new tax measures being implemented for 2011, though necessary to lessen the financial gap, are also a step towards ensuring that our revenues are derived from more sustainable sources and towards a future of fiscal stability. Indeed the intention is to review the revenue base as early as possible in 2011 to ensure more certainty in terms of revenue collection and the repeal of nuisance revenue measures.”

“Currently, a significant portion of our revenues comes from sources such as, stamp duties and work permits. We can no longer continue to be reliant on these sources as these are unpredictable revenue streams.”

“Expanding the revenue base will result in generating more revenue and in the long run will give us the financial stability needed to provide better service and development for the people of Anguilla.”

TAGS: individuals | tax | investment | economics | business | fiscal policy | employees | international financial centres (IFC) | budget | offshore | Anguilla

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