Businesses no longer have to worry about an impending increase in the cost of imported and locally manufactured goods, as the government abandoned its earlier plan to increase the Revenue Recovery Charge (RRC). Neither do consumers have to ponder how the tax increase would have affected their pockets.
With the repeal of Personal Income Tax (PIT) in mid-2016, the government had proposed an increase in the RRC from 10 to 13 percent, which it said was necessary to recoup lost revenue of about $40 million.
Minister of State in the Ministry of Finance and Corporate Governance, Senator Lennox Weston who made the revelation in September, said residents can now breathe a sigh of relief. Weston said the government abandoned the decision after it met its target without the tax-increase. He said the Gaston Browne led administration also recognised the potential effect the increase would have on the economy and working people.
He predicted the increase in RRC would have caused some additional price increases and as such it would have affected the working capital of some organisations.
The RRC therefore remains at the rate of 10 percent on all goods imported into or produced in Antigua and Barbuda.
According to the Revenue Recovery Charge Act (2010), the RRC “shall apply at the rate of 10 percent on all goods imported into or produced in Antigua and Barbuda. The charge shall be assessed on imported goods on the CIF value at the point of import and paid by an importer, together with import duties, to the comptroller.”
It further states that the producer shall apply the charge to the value of sales prior to the application of ABST and offset the amount of the charge incurred in that month and remit the balance to the comptroller of customs monthly.
In delivering the 2016 Budget Speech in January, it was Prime Minister Gaston Browne who announced that PIT would be scrapped. But, the government had to take other measures to make up for the near $40 million in lost revenue. Twenty million dollars of that revenue was expected to come from the increase in the RRC, while other tax reform initiatives such as the introduction of the new Unincorporated Business Tax was expected to make up the difference.
Senator Damani Tabor, the public relations officer of the United Progressive Party, stated that the opposition party wants this tax removed.
“Only employees got PIT relief, but all of the working professionals…accountants, architects and like…they were moved over to the Unincorporated Business Tax, or PIT by another name,” the opposition senator said. “So, what we are saying considering this windfall, the Unincorporated Business Tax should be removed.”
Tabor said that the business tax also disincentivises entrepreneurship.•