CMC- The International Monetary Fund (IMF) says Antigua and Barbuda should increase its tax earning, which at 16% of revenue, is just one percentage point below what the IMF says is needed to support the country’s developmental needs.
St. John’s, which does not tax incomes, is said to have the lowest tax-to-gross domestic product (GDP) ratio in the Eastern Caribbean Currency Union (ECCU).
“What does 16% tell us? It tells us that the tax to GDP is right at the margin, below which we would think that it is insufficient to support the country’s priorities,” IMF Managing Director, Kristalina Georgieva, said at news conference.
She fielded questions from journalists attending an IMF-sponsored training programme on economic and financial reporting, conducted by the Thomson Reuters Foundation.
Georgieva said that the IMF takes 15% tax-to-GDP ratio as the threshold below which the tax base is just not enough for the country to function.
“With 16% It’s above this threshold, but barely,” she noted, adding that that leads to three conclusions.
The first is that there has to be very strong investment in making sure that tax loopholes do not exist, and that this tax translates into revenues in a predictable manner.
“For this usually relying on digital — being able to trace every source of tax revenues and then monitor proper implementation of the tax system is absolutely paramount.”
Managing Director of the International Monetary Fund, Kristalina Georgieva, speaking to journalists in Chile. (CMC photo)
The IMF head said it is also important that the country consider whether the taxes collected are enough or whether it should do more.
“And if it decides that it should do more, in what manner that could be done?” Georgieva said, noting that the different sources of tax revenue include taxes on profit, income, property and inheritance.
“And it is important to look at these different ways in which tax revenues can be increased, and decide what would be most appropriate for the context of small, relatively small economy.”
Georgieva said the third issue that Antigua and Barbuda needs to look into is whether there are ways in which the economy may speed up economic growth.
She noted that the economy grew by 5.9% in 2023, with growth for 2024 projected at 6.1%, trimming down to 4% in 2025.
“So you have a relatively good performance. And the question is, could there be more to be done on the basis of this performance to increase revenues?” Georgieva said.
“You can broaden the sales tax — one possibility. You can introduce tax on alcohol or tobacco on things that are not good for your health. And you can say, ‘Well, we actually want to have a good custom system, and on that basis, collect more revenues.
“My answer would be, you’re barely there with 16%. Maybe you want to think of increasing your tax base. And certainly, since you’re just barely there, please collect every penny of taxes that are due.”
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