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Prime Minister of Antigua and Barbuda, Baldwin Spencer. Spencer's Finance Minister Dr Errol Cot announced measures in Parliament December 3 that effectively cuts income taxes to be paid by two income categories by 17 per cent and 33 per cent.

Antigua Finance Minister Dr. Errol Cort on Monday announced a reduction in the income tax rate from 15 per cent to as low as 10 per cent, and topped up salaries for public servants after revealing that the Baldwin Spencer administration was on track to a budget surplus next year.

Cort sold the reduction as a compromise, referring to public feedback that disposable income was being squeezed by direct taxes atop increases in the cost of living.

"Despite the fiscal challenges that we continue to face and despite our desire to continue on a prudent fiscal path, the government must listen to the cries of the people of this country and strive to find that elusive balance between economic policy and social policy," he said in Parliament.

"It is against this backdrop, that we have decided not to abolish the personal income tax but to change the structure by adjusting the bands and the rates."

Salaries will increase by 10 per cent, effective January.

Workers earning between EC$4,000 and EC$6,000 will be taxed at 10 per cent down from 15 per cent while those earning between EC$6,000 and EC$8000 will pay income tax of 12.5 per cent. (US$1 is equivalent to about EC$2.67).

Essentially, the two income groups will pay 17 to 33 per cent less tax.

Antigua's 2008 budget projects recurrent spending of EC$792 million while revenue and transfers are expected to reach EC$810 million, for a net gain of EC$18 million.

Operational surplus

The Finance Minister added that the government also expects to realise a primary or operational surplus of EC$21 million (US$8 million).

"This administration, unlike our predecessors, will ensure that this increase is implemented in January as promised and will not allow for the accumulation of arrears to our public servants," said Cort.

"However, it should also be noted that while we are a caring government, we are also very pragmatic and, as such, will demand a greater level of productivity from our public servants as we seek to provide quality and efficient service to the general public," he said.

The workforce will also see an increase in the minimum wage in 2008, he said, moving from EC$6.00 per hour to EC$7.50, in accordance with the recommendation of the minimum wage committee.

- CMC

Source: Financial Gleaner, Friday, December 7, 2007