Antigua and Barbuda - Politics, government, and taxation

Antigua and Barbuda is a constitutional monarchy whose parliament is fashioned on the British Westminster system. The Bird family has governed the country for over 30 years. The Antigua Labour Party (ALP), first led by Vere C. Bird and then by his son Lester B. Bird, has won all but the 1971 elections since universal adult suffrage was granted in 1951. In the most recent general elections held in March 1999 the ALP captured 12 of the 17 seats, thereby increasing its majority by 1 seat. The other political parties in parliament are the United Progressive Party (UPP), led by Baldwin Spencer, with 4 seats, and the Barbuda People's Movement (BPM), led by Hilbourne Frank, with 1 seat. The other parties are the Barbuda National Party (BNP), the Peoples Democratic Movement (PDM), and the Barbuda Independence Movement (BIM). The next general election is due to take place by 2004.

The government appears committed to encouraging private-sector growth principally in tourism and the offshore sector. The offshore sector includes IBCs such as banks located in the host country that operate in foreign countries such as the United Kingdom and the United States. IBCs opt to set up in these "tax havens" or "free zones" to benefit from the smaller rate of taxation charged there in comparison to the countries where many of their customers actually live. Moreover, the regulations governing IBCs' operation in the tax havens are often less restrictive than in the larger countries in which they also operate. The government has a policy of selling land for tourist and residential projects while it leases land for agricultural purposes.

Antigua and Barbuda has been rated as the least-taxed country in the Caribbean by a variety of regional and extra-regional financial institutions. Only 17 percent of the country's GNP comes from taxes, while other Caribbean countries get around 27 percent of their GNP from tax revenues on average. In 2000 the government introduced a new 2 percent tax on gross sales of EC$50,000 per year. This tax replaced a 25 percent business tax on profits. Some hotels had threatened to close while the commercial sector ceased importing goods from abroad, except for perishables, to cajole the government into rescinding the tax. However, the government has stood its ground. The International Monetary Fund (IMF) has suggested to the government that it should introduce a value-added tax (VAT) as a step towards increasing tax revenues. There is no personal income tax in Antigua and Barbuda. While the government was reporting cash-flow problems as recently as January 2001, the prime minister has made it clear that his government will not resort to personal income tax to ease its financial problems.

The Antigua and Barbuda Defence Force (ABDF) assists with surveillance on drug trafficking, and recently signed an agreement with the Canadian armed forces for assistance. The U.S. Air Force has a tracking station on Antigua.