By Charminae George
When Finance Minister and Prime Minister Gaston Browne delivers the 2024 budget on December 15, the 2 percent increase in the Antigua and Barbuda Sales Tax (ABST) will be highlighted in his speech.
Browne confirmed to Observer yesterday that the tax increase will occur next year, adjusting the current tax rate from 15 percent to 17 percent. Previously, he told residents to brace for the increase a few weeks ago, following recommendations from the Ministry of Finance.
During yesterday’s Post-Cabinet Press Briefing, Information Minister Melford Nicholas mentioned that the finance ministry had examined increasing the ABST to increase government funding.
“One of the things we had spent some time with the Ministry of Finance officials is looking at various measures that could be used to close that funding gap, the prime one being the increase in the by 2 percent,” he shared.
The Information Minister stated that the tax increase is something that is considered appropriate, and mentioned a possible way in which it will be implemented.
“We’re still thinking that it is appropriate and the Ministry of Finance officials have been asked to look at a phased implementation of these measures,” Nicholas stated.
He reiterated that the rise in the ABST is necessary due to the forecast increase to the salaries of public sector workers, among other expenses.
“The government made good on a commitment of 5 percent and a further 9 percent has been agreed with a vast majority of the public sector unions … the implication for these new increases would create a further increase in the fiscal requirements of the government,” he said.
Nicholas mentioned that the 2 percent increase is expected to have little to no impact on the cost of basic food items due to many of them being zero-rated.
In September, Browne announced a 14 percent increase to the salaries of workers in the public sector.
Zero-rated items refer to goods and services that are subject to ABST, but carry the tax at a rate of zero percent.
The list of zero-rated items include flour, rice, chicken, vegetables, vitamin C and multivitamins, baby formula, and sanitary napkins and tampons.
Items that do not appear on the zero-rated list include ramen, coffee, snacks such as potato chips, school supplies, and school uniforms.
The ABST was introduced in January 2007 and is a value-added tax that is imposed on the price which goods and services are sold at, according to the Inland Revenue Department.