ST. JOHN’S, Antigua, CMC – Prime Minister Gaston Browne has presented an EC$1.3 billion (One EC dollar=US$0.37 cents) budget to Parliament on Friday, announcing the introduction of several fiscal measures he said would strengthen revenue collection, reduce distortions in the tax system and improve taxpayer compliance.
Browne told legislators that these measures include reducing tax concessions granted, especially discretionary exemptions, adding,” We recognize that concessions and tax incentives are required to encourage investments in new projects and significant commercial expansions.”
But he said while his administration would continue to provide these concessions as required and by the Antigua and Barbuda Investment Authority (ABIA) Act and the Small Business Development Act, “for ongoing routine business operations to include consumables, these concessions will be discontinued.”
Browne said the Government is implementing the increased property tax rate on properties valued at more than three million, including a 10 percent excise tax on alcohol, tobacco, and cannabis products.
He said there would be an increase in the money transfer levy from two to five percent and broadening the Antigua and Barbuda Sales Tax (ABST) base by e
“We will also end the concessionary ABST rate applicable to several transactions, most notably in the tourism sector,” he said, also announcing an increase in the ABST rate from 15 to 17per cents and applying this rate to the tourism sector, which currently attracts a rate of 14 percent.
Browne told Parliament that although there may be a nominal impact on prices because of the rate adjustment, he wanted to emphasize that the change in the ABST rate will not affect a wide selection of food and other essential items.
“Already, many of the basic food items we presently consume are zero-rated, so consumers do not pay ABST on them,” he said, mentioning some of the zero-rated items such as “most fruits and vegetables to include but not limited to bananas, oranges, grapes, potatoes, broccoli, cauliflower and lettuce, baby products, dry goods, and oils to have pasta, sugar, corn meal, flour, rice, and cooking oils, o chicken, fish, locally produced meats, eggs, canned sardines and tuna.
He said bread, cereals, cheese and milk, water and medicine, pharmaceutical supplies, and adult diapers are also in the zero-rated category and that “exempt supplies for use in the agriculture and fisheries sectors will not be affected by the change in the ABST rate.”
Prime Minister Browne, also the Finance Minister, said that through the Ministry of Finance, Prices and Consumer Affairs Division, Customs and Excise Department, and other critical stakeholders, the Government will monitor prices as the revenue reforms are implemented.
“Further, the basket of essential goods and the list of price-controlled items are being reviewed, and recommendations will be made to the Cabinet for appropriate adjustments,” he said, adding that the intention is to minimize the price effect on primary and essential goods and ensure timely interventions are made to cushion any impact on vulnerable groups in society.
Browne said that the authorities will establish the Fiscal Resilience Oversight Committee within “a matter of weeks,” as contained in the Fiscal Resilience Guidelines.
He said the Committee will comprise up to seven members, drawn from the public and private sectors, and will include Antigua and Barbuda’s country economist at the St. Kitts-based Eastern Caribbean Central Bank (ECCB).
Browne told legislators that the Committee’s mandate is to assess and report on the Government’s compliance with the general fiscal responsibility principles outlined in the Fiscal Resilience Guidelines.
“Since the matter of fiscal sustainability cannot be treated as partisan, we will invite the Leader of the Opposition to recommend an individual to serve on the Fiscal Resilience Oversight Committee,” Browne said, adding that the additional revenue generated through the measures…will ensure improved service delivery and better infrastructure.
“We have also allocated EC$15 million in the budget to advance implementation of our arrears clearance strategy. While we intend to remain current with creditors and suppliers, we recognize the need to develop and execute a credible strategy to reduce arrears.
“It involves negotiating new financing terms with some creditors, a process that has already begun,” Browne said, noting that for local suppliers and contractors, the Government will employ a combination of setoffs with the tax authorities, write-offs where appropriate, cash payments, and issuance of bonds.
Browne said that the budget forecasts an overall deficit of EC$80.2 million or 1.25 percent of gross domestic product (GDP) and a primary surplus of $51.8 million or 0.8 percent of GDP.
He said this is a significant improvement over the projected fiscal outturn for 2023 and is consistent with the path in his administration’s Medium-Term Fiscal Strategy.
He told Parliament that total revenue and grants are budgeted at EC$1.2 billion or 18.9 percent of GDP, while total expenditure, excluding amortization payments, is budgeted at EC$1.3 billion or 17.1 percent of GDP.
“Amortization payments amount to EC$569.5 million or 8.9 percent of GDP, and our net financing requirement is EC$649.7 million or 10.1 percent of GDP.”
He said to meet the net financing requirement for the fiscal package; the Government will primarily rely on the issuance of securities on the Regional Government Securities Market, which will amount to EC250 million, and the disbursement of loans and advances amounting to EC$210 million.
Recurrent revenue is projected to be EC1.19 billion or 18.5 percent of GDP, of which tax revenue is one billion dollars or 15.7 percent. Non-tax revenue is budgeted at EC$176.9 million or 2.8 percent of GDP.
Browne said that it should be noted that even with the revenue reforms, tax to GDP, including organic revenue growth, will only increase by 0.7 percent to 15.7 percent, adding, “We will still have the lowest tax to GDP ratio and revenue to GDP ratio in the region.
“In other words, our country remains a low tax jurisdiction with high investments.”
Browne said the EC$219 million in additional revenue from recurrent sources, compared to the outturn in 2023, will be achieved through a combination of increased economic activity, increased Citizenship by Investment (CBI) receipts, and the impact of the revenue reforms to be implemented in 2024.
He said significant contributors to tax revenue are direct taxes of EC$156.5 million and indirect taxes of EC$853.1 million.
Prime Minister Browne said that direct taxes comprise corporation tax, property tax, and unincorporated business tax, which will yield EC$108.3 million, EC39.6 million, and EC$8.6 million, respectively.
Browne said recurrent expenditure is estimated to reach EC$1.1 billion or 17 percent of GDP in 2024. The most significant recurrent expenditure component is wages and salaries, budgeted at EC461.1 million.
He said it includes a nine percent salary increase for central government employees at the cost of EC$32 million, noting “this will complete the 14 percent increase and takes effect from January 1 next year.
Browne said he also wanted to remind legislators that the Cabinet recently approved up to a 14 percent increase for government pensioners.
“This is an acknowledgment of the challenges faced by our retired public servants due to escalating prices over recent years. These people have played pivotal roles in shaping our country, and we must provide them with the means to live comfortably and with dignity,” Browne said, adding that a committee has been assigned the task of developing a plan to implement this increase for government pensioners in 2024.
The debate on the budget will begin on Tuesday.
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