COMMENTARY: Tax the Poor – Is this Gastonomics?

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By Ernest J. Farfingbottom
Gaston Browne and the Labour Party seem 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?

 

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6 COMMENTS

  1. Mr Ernest Farfingbottom, I could not agree with you more.
    Gaston’s whole view of PIT in my view is selfish. He does not want to pay the tax on his income as this allows him to hold on to what would be paid to the treasury. He said that not having PIT frees up money for investment. How many monied Antiguans are investing and in what? Maybe Gaston and his family. He knows that the taxes the government should be receiving is just sitting in the banks. He himself talked about the millions sitting in the bank accounts of Antiguans.
    You cannot run a country on ABST alone. You need other revenue sources. But when the foreign investors come in they are given tax concessions for twenty five years and more. Yet the government has to maintain the infrastructure to the hotels.
    Gaston, tell us about your voodoo economics to borrow us out of debt. You can’t service the debt on the books but you are borrowing more, leaving a big problem for any future government.

  2. @ Ernest Bombohole
    Please point us readers to where you and others protested or resisted the removal of PIT for the reasons stated above. The government has stated clearly that if favours consumption over direct taxation on income.

    Now Social Security, Medical Benefits and Education Levy is taken from what? Income correct? Why do we need another tax head on income just to punish you cause you took your school lessons seriously, worked diligently, applied yourself and now can earn a decent wage.

    The tax regime in Antigua is quite fine. Where the problem lies is that we do not hold the GODS accountable to nothing!!!

    Pay medical benefits go the hospital wait 12 hours
    Pay social security go on maternity no timely payment.
    Pay ABST bad roads / no water
    Import a pencil you want duty free

    We need better accountability for whats on the books!!!

    Yes there is poverty in Antigua and every citizen and resident must gird their loins against it. However, some of the same so called poor find it when its carnival no complaints, find it when its time to buy some material thing to stunt on the neighbour instead of investing in skills and personal development. So if a person saves their pennies, invest in a course and can now earn more they must be punished for that??? We are already paying three taxes on income we need PIT so we can be inline with the theory, correct??!

    Let us all hold the government accountable for the wild wild west duty free regime. Let us hold them accountable for poor fixing of roads that damages vehicles and no water and late payments for social security and poor healthcare. Then…. when we can look out the window and see where the money is going… we should be able to justify another garnish to our wages.

    Till then… pay as you consume!

  3. @ Ernest J.
    Once again you have enlightened the public of a troubling situation. World over t is well accepted that Sales tax is a regressive tax on the poor and working class.

    It’s soaked the poor and the lower working class with a tax that eats into a large portion of their income; leaving less to spend on essentials. For the millionaires the billionaires and the political elites; and the ABST represent a miniscule portion of their income. In addition, they get what’s called investment tax holidays and tax concessions something not available to the poor.

    It is the role of the Opposition Political Party, and other institutions such as he religious institutions to educate the public.

    Without the proper education about the economy and taxes, the poor is left at the mercy of the political propaganda.

    Neither is there a robust media industry that offer the type educational programs which enlightens the public.
    This is an island where the discourse and tenants of good government is an anathema. Hardy discussed and never taught.

    Where would our country be a developing Nation if our political structure was one consensus; and if our citizens were taught and constantly exposed to the benefits of: Accountability and Efficiency. Fairness and Transparency, Competence and Responsiveness.

    What’s being referred to here as Gastronomics, is the same voodoo economics practiced across the Caribbean.
    The difference is in some places like Jamaica entrepreneurs are allowed to thrive. So, while there is a very large proportion in the population who are poor; they can aspire and work towards entrepreneurship where they work their way up to the middle class.

    Entrepreneurship hardly exists in Antigua and Barbuda. What we have instead in Political cult-ship

    I expect to see the normal group of morons offering up infantile gibberish; as well as the intellectually dishonest mentioning UPP as some form of defense against what “Ernest” have written.
    Ernest your opinion pieces breaks new ground. I hope it inspires other to do the same especially those who aspire to public office.

  4. I have been advocating for rational sustainable economic growth, as the mantra of good governance for sometime now. I was most shock and dismayed at having the PIT abondon by the invocation of Gastonomics; knowing full well, that each and every one residing on Antigua and Barbuda; do avail themselves to governmental services. Thus, personal income tax is a conduit for government revenue enhancement to fund basic and, needed services to the people; as each employee pay Into the system accordingly on a scale as they earn-bracket. There cannot be any exemption or, avoidance. Sales tax or, consumer tax; even with the basket exemption is a burden on the poor, more so, than income tax: in that, it put constraints more so on the lower bracket earners, tagged at the register for basic consumerbles (not of luxury items) for personal sustainability; in a country that does not manufacturer anything and, produces only agriculture consumer products- in a tourist driven economy which, In effect, relegate the people into a sense of blind perpetual servitude of rendering services for the benefit of the sunrise/sunset interloper’s apartied enclaves. Surely: it is the bottom that keeps the top on top. Thus the prevailing mantra of buffer zones between the haves, and have nots and, the burden of the trickle down Gastonomics in effect, is a known yoke to keep the people entrenched in poverty and, wanting on an un-yealing and, uneven playing field in this Coon & Buffoons sellout show.

  5. @hand it to me,

    You seem to want it both ways. I’m sorry no offence to you.

    Your position “The Tax Policies are fine” but in your view the “delivery of services” is the issue. True: they are not the same, but they are interlinked.

    I agree as you rightfully you state;the political operators are not being held accountable.

    The organizations and institutions in a healthy democracy holds the Government responsible are normally begins with The Press, The Legal Community, The Business Community, The Religious Community; together with many other organizations designed for the purpose.

    Most of the issues raised by “The Opinion Writer, Ernest J.” in his series of articles, written from his observations; and are not opinions attendant to articles covering significant issues in our everyday life that has been covered in the local press.

    This is not rocket science. Lets not bicker on PIT vs ABST.

    What needs to be done is to call out and pressure the Organizations and Institutions who are enablers of the lack of accountability.

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