PROVIDENCIALES, Turks and Caicos Islands, Monday July 9, 2012 – A move by the British government to impose an 11% Value Added Tax (VAT) in the Turks and Caicos to help meet severe revenue shortfalls in that dependency is not going down well with business and political leaders.
The VAT Bill passed its reading with the Turks and Caicos Islands Advisory Council last Wednesday (July 4) on Grand Turk.
Last Friday (July 6), the Turks and Caicos Independent Business Council published an open letter in the media to the British government castigating the Foreign and Commonwealth Office and Governor Ric Todd for their failure to engage with local businesses on what the business leaders called “totally unnecessary legislation”.
Their protest letter by the newly formed group consisting of business owners, managers, independent professionals and members of the community, was swiftly followed by an announcement that same day that the leaders of the Island’s two leading parties, Dr Rufus Ewing, leader of the Progressive National Party (PNP) and Oswald Skippings, leader of the People’s Democratic Movement (PDM), had signed an anti-VAT petition.
According to the business council, Ewing and Oswald’s signatures joined those of over 3000 other signatories, representing over half of the electorate, calling on the government to delay its introduction of VAT to enable a full analysis of its cost and potential impact so that there could be an informed debate as to its merits and value for Turks and Caicos.
In their original letter, the business leaders accused British officials of failing to resist European Union and International Monetary Fund pressure to “press for ‘one size fits all’ high tax policies no matter the individual demands of smaller economies that bear no fiscal relation whatsoever to large (and financially incontinent) European countries.”
Said to represent the interests of all the leading businesses in the Turks and Caicos Islands, the Turks and Caicos Independent Business Council was formed out of deep concerned about the expected negative effects of the hasty introduction of VAT into the island’s tax structure, stated the group in its media releases.
Acting Governor Patrick Boyle has said that the introduction of VAT is hugely important for the future development of the archipelago.
“Put simply, VAT will help ensure that public services receive a steady and predictable income. Public finances have fluctuated wildly in recent times. Under the present system if the money dries up what do we do – stop providing essential services?” questioned Boyle following last week’s announcement that the Bill had passed.
“I am certain that the incoming government in November will be grateful to benefit from such an improved future cash flow. The introduction of VAT will help put this country on a stronger footing for the future by spreading the same tax take over a broader more stable range of sources.
“The introduction of VAT is not about taking more tax, it is about creating more stable public finances,” he went on to add.
While outlining a raft of zero-rated goods and services including water, electricity, basic food items, and resort fees, Boyce acknowledged that costs of items could initially go up following implementation of the compound tax.
“I do accept, however, that VAT will be newly applied to other items by larger businesses that have to register for VAT, such as legal, accounting, architectural or air-conditioning services which have not previously included tax in their sales price and this could make them initially up to 11% more expensive if these services are not being provided to another VAT registered business. But those registered firms affected would also have the benefit of being able to offset the VAT that they pay out to their suppliers against the VAT that they bring in from their clients. We also believe that it is fairer to have all significant businesses here in the Turks and Caicos Islands paying their share of the tax burden,” he said.