By Machela Osagboro
Local businesses appear to be at a financial disadvantage due to the amount of concessions given to foreign businesses investing in Antigua and Barbuda.
The twin island nation is said to be second only to St Kitts and Nevis in the Eastern Caribbean Currency Union (ECCU) in the value of tax incentives handed to overseas investors.
International Monetary Fund (IMF) Mission Chief for Peru and Antigua and Barbuda, Leo Bonato, recently said this raised doubts about the effectiveness of such incentives.
“The concessions put the local businesses at a disadvantage in that we have to carry the burden of the taxation in this economy,” local businessman Eaves Ephraim told Observer.
He postulated that the government has created a business environment that is “hostile” to native businesses.
Addressing a Chamber of Commerce forum last week, Bonato had said that Antigua and Barbuda “is one of the countries that gives more concessions and that undermines the tax space”.
Bonato added that the country is not getting the level of tax revenue that it could because of the excessive amount of concessions given to foreign direct investors.
Ephraim said that the region was following an archaic model of economic development, which he described as more akin to slavery than to any contemporary model of development.
Economist Petra Williams defended the government, saying the amount of concessions given to foreigners was a ‘chicken and egg’ situation.
“All of our OECS contributions are significant because we are all small microcosmic states and we need to find ways to attract this investment if we want it,” she said.
She maintained that “concessions, to me, remain par for the course until such times as we find a way to restructure”.
Williams claimed the government was pushing an entrepreneurial-socialist state which seeks to create a level playing field for business creation but said more needs to be done to level the playing field for local enterprises.
Financial expert Everette Christian also commented on the issue, saying the government doesn’t need to “give away the shirts off our backs” in order to give these big companies a tax break.
Many agree that Antigua and Barbuda is caught in a quandary because it is hard to attract investments into the country without a large enough tax revenue to create the structures that will draw investors. Without concessions it would seem that, for now, incentives are necessary.
In a straight-talking statement, Bonato related that the concessions within the country are so discretionary that there are no clear rules on which basis they are given. This, he claimed, has created the uneasy situation of an uneven playing field leaving local businesses on edge, essentially operating in uncertainty. The true impact of tax incentives on local business cannot be properly analysed because there isn’t enough data, he added.