By Theresa Gordon - Thursday, February 23rd, 2012.
St. John?s Antigua- The government has fiercely defended the proposed taxation of employees? benefits and allowances, which is slated to take effect in April 2012.
Finance and Economy Minister Harold Lovell announced the date change on Tuesday at a town hall meeting.
The development was due to take place on March 1.
Speaking on the matter for the first time Prime Minister Baldwin Spencer said the closing of the tax net is needed at this time to further propel growth in the country?s faltering economy.
Spencer said his government has already given enough leeway in allowing the situation to get out of hand when it lapsed in 2005 by not imposing all the provisions of the personal income tax.
?The reality is that if we do not make some effort to do what we are doing here, some of the basic things that we are required to deliver to the people Antigua & Barbuda would pose a problem,? Spencer said.
The country?s chief servant said if efforts are not made to recoup the government?s fair share of taxes, it would create a more disastrous situation for the country?s economy.
He stressed that the money collected will be pumped back into the economy.
Lovell, who also attended the forum organised by the Antigua Workers Union (AWU), also sought to allay the fears of the many participants.
He pointed out that the government does not feel any joy in enforcing taxes on the nation but this is something which needs to be done and urgently.
He explained that personal income tax is really based on a system of equity, in that persons are expected to pay in accordance with what they earn.
?A person who earns $4,000 per month they would pay $100 in Income Tax every month because the first $3,000 is a personal allowance for everybody, so nobody pays on the first $3,000.? If you earn $4,000 you get taxed on the 1,000 at ten % and you pay one hundred dollars in tax per month.?
The finance minister said the twin island state is still the lowest taxed country in the OECS with the highest standard of living.
?Our tax to GDP ratio is approximately 22 percent at the high, when you go to other countries in the OECS some of them are as high as 33- 35 percent tax to GDP ratio. That means for the size of the economy the amount of money that they are collecting is much greater proportionally than what we are collecting,? Lovell said.
He also indicated that consultations are ongoing with the trade unions and other members of the business community and adjustments will be made to the 35-paged PAYE guide to reflect their concerns.
The finance minister noted the ministry will be looking to conclude the consultations shortly.
In his 2012 Budget Statement the Finance Minister announced that the Inland Revenue Department would begin to administer the Personal Income Act in full in 2012, by implementing the provision for taxing benefits and allowances.
This provision was administratively deferred when the Act was passed in 2005.
The development is expected to largely impact self-employed persons and professionals and other high income earners with similar classifications, who classify a major portion of their earnings as allowances.
The government is hoping to rake in close to $90 million in extra revenue through this proposed measure.
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Source: http://www.antiguaobserver.com/?p=71584
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