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Thursday, September 21, 2006 

Sales Tax and Fiscal Policy: Where to Find the Right Equilibrium
By aiming with an unabashed determination toward the setting of Sales Tax measures, the government of Antigua & Barbuda is embarking into a sensitive route where the final outcomes might turn into a nightmarish journey in regards to their long-term capacity to control inflation and at the same time ensuring macroeconomic stability.
As those measures are undertaken, controversies have also started to boil in regards to the relevance of such a mechanism, and above all the drawbacks that could be experienced through rising cost of living and a decrease in consumption levels.

Those goods that are going to climb, and it is estimated that the cost of living might rise over 10 per cent. The goods which are zero rated they are not new. They are already enjoying no consumption tax.

As I see it, and referring to the above mentioned article, the political dimension and willingness to open up consultations with all stakeholders about these issues should be necessary steps for the government, instead of a playing it alone kinda demeanor. It is true that indirect taxes can be effective ways to generate quick revenues for governments, but on the other hand a strong balance between different tax regimes is a more appropriate framework to ensure and improve income distribution and harmonization between different earning brackets.

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