fp Turks and Caicos

Claims and counterclaims continue to fly between those who oppose value-added taxes and the Turks and Caicos Islands interim government, which seems undeterred in its push to implement VAT in April 2013.

The latest volley came from Acting Gov. Patrick Boyle addressing claims by some opponents that VAT is not needed because government income has been rising and a small surplus is predicted in fiscal 2012-13.

“But surely people realise that this has been achieved only by introducing draconian spending restrictions, which are set to continue until we can be sure the government’s financial position will remain in surplus and until economic growth allows increases in government expenditure,” Boyle said in a July 10 statement.

“Look around. Decades old reverse-osmosis plants? Crumbling roads? Overcrowded schools? While our new investment is welcome, it is clearly the tip of the iceberg in terms of what will be needed in the years ahead. What of the (10-percent) pay cuts taken by civil servants? When and how will their pay rise to what it was before, never mind enjoy real increases?”

Some opponents argue that relying on customs import duties, accommodations tax and stamp duty from land sales has served the country well and should continue.

Boyle says that formula caused government revenue to be unpredictable — “$130 million in financial year 2009-10, $170 million in 2010-11, $200 million this year. What do we do if government income is only $190 million in the next financial year, for example?”

The group “No to VAT” claims that “VAT has not ensured that public services receive a steady and predictable income over the past years for our Caribbean peers and in European countries who have implemented VAT. This is a fact. The acting governor fails to explain both in general and in detail how VAT can achieve all this in the TCI when it has failed to do so in each and every other jurisdiction.”

Boyle has said that VAT should not cause prices to go up, but he admitted that service businesses that will have to collect and pay VAT on their sales will likely increase their prices.

“No to VAT” says the tax will increase the price of goods by 5 percent for imports and up to 9 percent for the construction industry.

The Advisory Council approved the ordinance to create VAT at its July 4 meeting. However, member Joseph Connolly did not attend the meeting and resigned the next day, saying the new tax needs more study to see if it is really best for the country. Member Edith Cox also wasn’t at the meeting and has questioned the timing of the tax.

Other members not present were Doreen Quelch-Stubbs and Clayton Thomas.

The Providenciales Chamber of Commerce also has joined the chorus of other groups calling for more time to consider VAT.

Chamber President Tina Fenimore said the Advisory Council’s endorsement was “completely void of sensitivity. There have been consistent, persistent and explained outcries of opposition from just about every sector of society; it should mean something to the appointed councillors that in our democracy this majority is being ignored so that the U.K. ’s agenda can progress.

“These councillors should be ashamed of their support of the interim administration once again utterly disregarding even the most sensible positions on this imposed legislation,” she said.

Fenimore said the council should have had a press conference where members could state their positions on VAT.

The council meets behind closed doors and usually only makes known its discussions and actions through government press statements.

The Consultative Forum has reviewed the VAT ordinance behind closed doors but met July 12 to discuss in an open session.

Both political parties also announced their opposition to the tax.

People’s Democratic Movement Leader Oswald Skippings said the tax should not be implemented but should be considered by an elected government, set to return to power after elections Nov. 9.

Progressive National Party Leader Dr. Rufus Ewing said his party believes the tax would not be good for the economy and should be studied further by an elected government.

While some have appealed to the U.K. to intervene and stop the implementation of VAT, Foreign Minister Henry Bellingham told Parliament on June 18 that the decision was up to the TCI government.

“Their decision was based on thorough research and an assessment that VAT would offer a simpler, equitable and stable revenue source,” he said.

More on VAT

TCIBC Chairman responds to Patrick Boyle - July 11, 2012

Patrick Boyle responds to anti-VAT coalition - July 10, 2012

Provo Chamber questions Advisory Council’s decision on VAT - July 6, 2012

PNP opposes implementation of VAT - July 6, 2012

TCI Government response to the anti-VAT leaflet ‘How VAT Affects You’ - July 6, 2012

"No to VAT" group letter to Patrick Boyle, Neil Smith - July 6, 2012

"No to VAT" reply to the CFO's attack against the Turks and Caicos Business Council - July 4, 2012

“No to VAT” letter to Henry Bellingham, Andrew Rosindell - July 4, 2012

VAT White Paper - July 2, 2012

CFO response to TCIBC - July 2, 2012

TCIBC says VAT consulation is a sham - June 29, 2012

Turks and Caicos Hotel and Tourism Association on VAT - June 18, 2012

TCI United against VAT red paper - June 13, 2012