COMMENTARY: Tax the Poor

The content originally appeared on: Antigua News Room

Gaston Browne and the Labour seem to have to have a fundamental problem with the concept of progressive taxation.

And unfortunately, most people are too confused about the issue to see through the routine nonsense spewed by the Prime Minister and his colleagues.

Progressive taxation means higher tax rates for those with higher income or more wealth, so that those who earn or have more are taxed at a higher rate. Personal income tax based on graduated scales where the tax rate goes up as income level rises is probably the clearest example of progressivity.

There are 195 countries in the world today, and only a few have no income taxes. It is important to understand that income tax has become a basic component of any modern government’s revenue raising measures.

It is an anomaly when there is none.

In Antigua and Barbuda’s case, we were told by Gaston that personal income tax (PIT) was destructive. He said it was stealing the potential for people to invest, and to hire domestic workers, thereby expanding the economy.

That’s what he said. So he got rid of it.

What’s amazing to note is that he opted not to increase the threshold or lower the income tax rate, but rather to absolutely abolish it completely.

It stands to reason that if he believed income tax was too onerous on middle income earners, he could simply have upped the threshold.

For example, he could have said, no one who earns below 6,000 will pay income tax.

Additionally, he could have lowered the rate. He could have said, we want our wealthy Antiguans to invest, so we are dropping the PIT rate on them from 15 percent, for example, to 9 percent.

The logic here is that you can give a tax break where you think it’s needed, but you keep the tax as a strong source of revenue, and the framework remains in place in case you have to up the tax in a future crisis.

But he didn’t do any of that. He completely abolished income tax.  Wealthy people in Antigua and Barbuda who are millionaires (like Gaston) ceased paying taxes on their personal income, as did moderate income earners at the bottom of the scale.

Fast forward, and the government tells us that it needs revenue to pay increases to public servants. So, it says it will raise ABST.

We all pay sales tax at the same rate. It is not progressive. Gaston does not pay a higher rate in sales tax because he is a wealthy businessman as compared to the moderately paid secretary who works in his office.

So his secretary, on her public servant’s salary, is now to expect that the used car she wanted to buy will cost more, and so will the fridge that she needs to get. Services she gets from all sorts of vendors will increase as well. And this is ontop of serious inflation.

What about those earning even less? Certain items that are basic will cost more.

They tell us about the basket of zero rated goods that will not be affected, as if humans can live alone in a modern world on only the items in that basket.

Does this government want us to be a place where we can afford to have basic appliances and services or are we now to treat these things as a luxury?

My issue is not that the government has decided to raise sales tax.

Raising taxes is at times a necessary measure to meet the demands of reasonable public expenditure. My issue is that they did it in the context of a taxation regime that does not tax people progressively. And they really don’t seem to care.

Politicians bleat regularly about the poverty they encounter in their constituencies – about the people who beg for money to help meet medical costs, pay school fees, buy appliances that they need, restock the shelves, get building supplies, etc.

What is the Labour Party telling these people? That their cost of living is going up? And why? Because Gaston would rather hike a tax that makes life harder for the lowest earners, than to upset the higher income earning bracket with any form of progressive taxation.

I know why he raised ABST. Because having abolished Pit like a complete idiot, he knows he would look like a fool to come back with any sort of income tax.

Funnily enough, both the ABST and PIT were introduced by the Spencer administration. What on earth was the Labour Party running this country on before then? Steam? I am genuinely curious.

Oh. I forgot. They bankrupted social security instead of introducing taxes like a normal government. Take from the poor to give to the poor. Then tell them it’s charity. Boss move.

I wonder what is in this man’s head at times? He claims to be a financial wiz but his polices are at times completely bizarre. Why would you want to run a country where you excuse the wealthy from paying income tax, only to then raise sales taxes on everyone, when the majority of your people earn low salaries?

He has been running this country partially on the sale of passports as opposed to on the basis of strong recurring tax revenue. We use CIP money as an integral component of meeting recurrent expenditure and not as a surplus fund for special projects. You do not need a degree in finance to know that that makes no sense. Yet, this is what occurs.

That’s like running a business where your business income does not match your business expenditure, but you continuously use cash from a side hussle to keep your business afloat. What happens if our CIP side hussle weakens? Will Gaston raise ABST to 20 percent? 25 percent?

This is the same Prime Minister who has justified many controversial consesssions and duty waivers to mega investors who can afford to pay. What is the crux of Gastonomics? Make Antigua a tax haven and hope that wealthy foreigners land here to rescue us from poverty?

Should we not, instead, have a fair and just system of taxation that is reasonable to everyone based on their means? When will Caribbean leaders get over this pathetic and misguided love affair they have with expatriate money men? It is that love affair that drives them to insist that we be a no income tax jurisdiction – to attract wealthy people.

Why not have common sense policies for sustainable growth? What is really the government’s economic philosophy? Gastonomics? Gastopreneurial Socialism? Alphonsocialism? Alphapitalism? Make-it-up-as-you-go-alongalism?

Ernest J. Farfingbottom

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