Antigua & Barbuda Considers New Sales Tax

by Amanda Banks, Tax-News.com, London

26 July 2005

The Ministry of Finance and the Economy of Antigua & Barbuda has convened a discussion forum with the members of the National Economic and Social Council (NESC) to consider issues relating to the introduction of a sales tax in the islands.

The Minister of Finance and the Economy, Dr. the Hon. Errol Cort, indicated that the Antigua & Barbuda sales tax (ABST), which is a VAT-type tax on consumption, is one element in a wider process of tax reform which is aimed at revamping the tax system in order to promote greater efficiency in tax administration.

Antigua & Barbuda is also heavily in debt. Last year's IMF report on Antigua & Barbuda suggested that years of fiscal mismanagement had led to a very large build-up of public debt, close to EC$3 billion (US$1.1 billion), equivalent to 135% of GDP at the end of 2003, which the government is now attempting to put right through fiscal reform.

In their presentation to the NESC representatives, the Ministry of Finance and Economy consultants provided a brief overview of the ABST, focusing on the rationale for the introduction of such a tax, how the ABST would work, who would be affected, and the administrative machinery that would execute the tax.

During the discussions, the participants stressed the importance of ensuring that this ABST did not create a greater burden for taxpayers whilst ensuring that all the relevant businesses were captured within the tax net.

According to Dr Cort, the ABST is designed to replace the existing Consumption Tax, along with a number of other taxes that are currently levied on goods and services.

A White Paper on the ABST is expected to be published within the next few weeks, following which the Ministry of Finance and Economics will undertake a series of public consultations and will also launch a number of public information programmes on the ABST.

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