Antigua's Plans To Introduce VAT Meet With Hostility

Mandy Robinson, Tax-news.com, London

21 March 2001

Antigua & Barbuda's Prime Minister, Lester Bird, has declared that he plans to introduce a VAT of two per cent as part of the government's efforts to 'do something about its fiscal imbalance to meet the commitment to run the country.'

In a report by local publication the Antigua Sun, Mr Bird said other Caribbean countries already use the VAT system and the government is currently deciding on how to prioritise the spending of the extra revenue when it is implemented next year. The Prime Minister explained that his decision was based on the conclusions of a recent report conducted by the IMF, saying 'we do not pay enough taxes, we are spoilt.'

The introduction of the Common External Tariff, whereby goods produced in the region are tax-free, has significantly reduced the government's revenue income and the implementation of the VAT will help to recover some of its losses.

Mr Bird's plans are no surprise to the leader of the opposition, Baldwin Spencer (United Progressive Party), who predicted last year that the government would introduce VAT despite the fact that the it had pledged not to introduce any new taxes. He said: 'I am not privy to what measure they will implement to counter propose the introduction of VAT, but the fact of the matter is another broken promise by the Antigua Labour Party. Clearly VAT is a tax. It is going against the solemn pledge to the people of Antigua & Barbuda. Just offloading a series of taxes to further burdening the people of Antigua & Barbuda is perhaps not the solution to the nations problems.'

Mr Spencer argued that the introduction of a VAT system is not the answer to all the government's fiscal problems, indeed it may damage the economy instead of reviving it. He said there were enough tax measures already in force to tackle those issues: 'What has been happening over the years is that they have allowed expenditure to get out of control. In my view they deliberately failed to collect the taxes from the existing measures that are on the books. I think it is unfair to the people when government has acted irresponsibly over the years by not collecting taxes, and being irresponsible in their tax collection machinery, to want citizens to bear the brunt – for their inefficiency, and squandermania,' he said.

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