Wednesday, 12 December 2012 02:30
By caribarena news
Antigua St. john's - Government on Tuesday announced that it will reduce the Antigua and Barbuda Sales Tax (ABST) rate from 15 percent to 5-percent on Saturday December 15 and Sunday December 16 meaning this coming weekend.
A press release from the Ministry of Finance and the Economy says “reduction will apply to all types of goods sold in Antigua and Barbuda during the period from 12:01 am on December 15th 2012 to midnight on December 16th 2012.
According to the statement, the decision follows consultations with the business community and technicians in the Ministry of Finance and the Economy.
The aim, it says, is to provide a boost to the local business community, particularly for the Christmas season.
Efforts to contact Finance and Economy Minister Harold Lovell for further comment were unsuccessful. But Caribarena did get to speak with Everett Christian, manager of the Revenue Reform Project in the Finance Ministry.
We began by asking him whether there was any particular reason why the mid-month days of 15th and 16th were chosen also coming, as they do, exactly before the December 17th date when Finance Minister Lovell is due to present the 2013 Budgetary Estimates in Parliament.
“We have been engaged in discussions with the Employers Federation about various measures that could be taken in an attempt to stimulate economic activity, and one of the recommendations that they put forward was to have an ABST-free day …” he explained.
Christian said the Ministry favourably considered the request, although not going along exactly with what the Employers Federation recommended instead, to use his words, “giving it a new twist”.
Insofar as the timing is concerned, Christian said “We decided to do it before the end of the year, and we didn’t wish to wait until next weekend, which would be into the Christmas weekend. So it’s not like we specifically selected these dates, but if we don’t do it now, it would not be likely until the new year; and then it wouldn’t have the effect for the Christmas season as the business people had recommended to us.”
Asked whether the ABST reduction would not have a limited commercial impact because of its placement on a weekend when many businesses would be closed, Christian, without hesitation, disagreed.
“When we first looked at it within the Ministry, we were thinking of only extending the facility to groceries and supermarkets.
That was the initial thinking, and this is where the Saturday and Sunday came into play. But subsequently we decided to extend it to all retail outlets, so that it would cover all goods; not services, let me stress, but goods.”
Quizzed about the amount of revenue Government would be foregoing as a result of this two-day slashing of the ABST by two-thirds, Christian said: “The expectation is that we will not be foregoing any revenue, but we would not be able to tell that until after the actual event.”
Pressed to elaborate on that optimistic projection, he stated: “The hypothesis we are working on is that the increased volume over the two days at the lower rate will compensate for what revenue that would have normally been generated if the rate had stayed at 15 percent. But only after the event will we be able to tell whether or not that proves to be accurate, and if it had the intended impact.”
Christian did not want to comment on whether the outcome of ABST-reduction-weekend could inform a review of the tax which many claim has worsened the economic woes that have befallen Antigua and Barbuda in the last four years.