Antigua Rebuffs IMF Fiscal Policy Warning
by Mike Godfrey, Lowtax.net, Washington
07 May, 2014
Antigua and Barbuda's Finance Minister, Harold Lovell, has rejected calls for higher taxes, recommended in a recent International Monetary Fund report, stating that the territory remains committed to low tax rates.
The report by the IMF noted that the economy had grown by 0.5 percent in 2013 and is expected to grow by 1.6 percent this year. However, it emphasized that economic risks are still high given the combination of nonperforming loans in the banking sectors and the islands' fiscal situation which it said is "unsustainable."
The IMF stressed the importance of reversing fiscal slippages and encouraged the creation of a comprehensive medium-term fiscal consolidation program to put public debt on a sustainable path. It urged the Government to scale back tax exemptions and create a cash buffer to protect against adverse financial shocks.
However, Antigua and Barbuda has recently granted major tax breaks and cut personal income tax, claiming that lower taxes will stimulate economic growth. Antigua and Barbuda has also recently launched a citizenship by investment program, which the IMF acknowledges may bring increased revenue and investment for the territory.
Responding to the IMF report Lovell was quoted by local media as saying: "We agreed to a package of incentives which ultimately will cause persons, we expect, to be attracted to investment in Antigua. It's intended as a stimulus. The IMF does not like measures of that nature. We felt we had to reduce the taxes in terms of attracting investment by locals and foreigners and obviously it's not something they agree with. We also agreed we would trim a bit off the Personal Income Tax That's not something they (IMF) agreed with, but we're a sovereign country and we continue to do the things which we, in our view, think are the right things to do. At the end of the day, it's one position against another position – we respect their position, we just don't agree with it."
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