By Elesha George
The Cabinet is “actively considering” introducing a number of cost-cutting and revenue collection measures that will assist the State in recovering from the Covid pandemic.
The measures being proposed include negotiating land swaps with creditors, reducing equipment rental rates, asking creditors to write off debt up to 50 percent, setting-off taxes against payment owed to the government, and pushing for stronger tax collection where applicable.
“We’re looking at the possibility of reducing real estate rentals down to about EC$3 per square foot for the next 36 months; reduction in the rate of heavy equipment rentals to include backhoes, trucks and so on – about 33 and a 1/3 percent; strengthening collection of existing taxes including property taxe; ensuring that all properties are captured in the property tax net to enhance the collection of tax revenues generally,” Browne explained.
The prime minister said the government will convert the remaining debt it owes to suppliers into long-term bonds payable at two percent over 10 years. Once these arrangements are agreed to, Browne is committed to paying suppliers on time for the remaining debt and services offered.
Airbnbs and villas will also be pressed to pay Antigua Barbuda Sales Tax (ABST) to the state as mandated by law. The prime minister said that the government will set off contributions owed to the state against money it owes to creditors.
Meanwhile, for the first time since being elected to public office, the Antigua Barbuda Labour Party (ABLP) government expects to run a substantial budget deficit.
Prime Minister Gaston Browne has said it is likely that the economy will contract by at least 18 percent.
He is also projecting that the state will lose close to one billion dollars due to indirect economic loss as a result of job losses and pandemic-spending caused by the Covid crisis.
Since 2014, the government has recorded an average of five percent growth, and was anticipating growth of 6 ½ percent for 2020 – hoping to collect in excess of one billion dollars in revenue this year.
“We’re likely to see between an 18 and 20 percent reduction in GDP through no fault of ours, and that will translate to almost one billion dollars in value,” he stressed.
After reportedly having an EC$48 million surplus in the first quarter of 2020, by September, Browne said the government had already recorded a EC$200 million reduction in revenue.
“For the first nine months of 2019, we collected EC$765 million. For the same nine-month period in 2020, we collected EC$565 million. We would have collected EC$200 million in the first quarter compared to the first quarter of 2019, so if you added that EC$200 million superior performance to this EC$200 million that we would have lost, then you will see that is a net swing of EC$450 million in revenue in terms of the losses,” the prime minister explained.
The swing in revenue for the first nine months of the year he surmised would have been EC$450 million or 45 percent of the government’s revenue intake.