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No VAT for Turks and Caicos Islands

By Hayden Boyce
Publisher & Editor-in-Chief, TCISUN

The controversial Valued Added Tax (VAT) will not be introduced in the Turks and Caicos Islands.

In a joint letter to Premier Hon. Dr. Rufus Ewing dated February 25th 2013, United Kingdom (UK) Minister for Overseas Territories and the Caribbean Mark Simmonds, and Alan Duncan, Minister of State for the Department for International Development (DFID) stated: “We (UK Government) accept TCIG’s proposal not to implement VAT on April 1st…The Governor (Ric Todd) will not give his assent to the Private Member’s Bill to repeal VAT, but I will instruct the Governor not to sign the Commencement Notice which would have brought in VAT on April 1, 2013. As the signing of this notice is what would have been required to introduce VAT, there is no need for further legislative action.”

The letter, which thanked Premier Ewing for his January 29th letter to the UK Government which complained about the introduction of VAT, added that the UK Government took the decision not to implement VAT on the understanding that “the Fiscal and Strategic Policy Statement (FSPS) you (Premier Ewing) supplied with your letter is revised in line with your proposed spending reductions. The revised FSPS must show credible surpluses. It must be fully adjusted to reflect the decision not to introduce VAT, the uncertainty about alternative revenue streams and the weakening outlook for some existing revenue streams set out in the third quarter fiscal forecasts. The FSPS should be signed off by the Chief Financial Officer, as provided for under legislation, before being re-sent to London for final approval. TCIG will need to bear in mind that an approved FSPS is required before its budget can be agreed for 2013/2014 so there is some urgency”.

The letter added: “I will instruct my team to monitor the financial situation very closely. I cannot and will not allow a reversal of the progress that has been made by the interim government, which is a vital component for the reputation of TCI and its people.”

The joint-letter from Simmonds and Duncan said it is still their view that VAT would provide a “fairer, broader and more stable revenue stream” and that without this, the burden of taxation will “fall on a smaller number of businesses and households”.

According to the letter: “TCIG will therefore need to take steps to constrain expenditure within the legal binding fiscal framework which is now in place, as stated in your (Premier Ewing’s) letter dated January 29th. TCIG will also need to take further steps to build TCI’s credibility with the international financial markets so that you are in a position to refinance without a UK loan guarantee after 2016”.

In a rare but strong showing of bi-partisan unity, Members of Parliament (MPs) from the ruling Progressive National Party (PNP) and the Opposition People’s Democratic Movement (PDM) on Thursday February 1st, voted to repeal the controversial Valued Added Tax (VAT) law.

The Turks and Caicos Independent Business Council, led by prominent businessman and Queen’s Counsel Clive Stanbrook, had also mounted an aggressive local and international campaign against VAT, which would have been introduced a rate of 11 percent.

Premier Dr. Ewing last week raised the issue of VAT at the 24th Inter-Sessional Meeting of the Conference of Heads of Government of CARICOM which was held in Haiti.

On the issue of taxation without representation, Dr. Ewing told CARICOM: “We have made representations to the effect that VAT is not in the best interest of a small economy such as ours and have provided sound alternative revenue generating measures. While we maintain that VAT will not work in the Turks and Caicos Islands, we are more concerned, as you can see, that the principle of Democracy and Good Governance, which mandates that the people of the Turks and Caicos Islands through their elected officials, must have an opportunity to consider any measure that seeks to impose an additional tax burden on them or to otherwise alter their tax structure, is a principle that is being sacrificed on the altar of despotism. If His Excellency the Governor (Ric Todd) refuses to assent to the repeal bill, he would have said in no uncertain terms that the voice of the people is the voice of God, only so long as God and the United Kingdom Government are singing in chorus. I cannot stress with sufficient strength nor overstate the significance of these events. The question is not one of taxation, but rather, one of democracy.”

 

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By Hayden Boyce
Publisher & Editor-in-Chief, TCISUN

The controversial Valued Added Tax (VAT) will not be introduced in the Turks and Caicos Islands.

In a joint letter to Premier Hon. Dr. Rufus Ewing dated February 25th 2013, United Kingdom (UK) Minister for Overseas Territories and the Caribbean Mark Simmonds, and Alan Duncan, Minister of State for the Department for International Development (DFID) stated: “We (UK Government) accept TCIG’s proposal not to implement VAT on April 1st…The Governor (Ric Todd) will not give his assent to the Private Member’s Bill to repeal VAT, but I will instruct the Governor not to sign the Commencement Notice which would have brought in VAT on April 1, 2013. As the signing of this notice is what would have been required to introduce VAT, there is no need for further legislative action.”

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The letter, which thanked Premier Ewing for his January 29th letter to the UK Government which complained about the introduction of VAT, added that the UK Government took the decision not to implement VAT on the understanding that “the Fiscal and Strategic Policy Statement (FSPS) you (Premier Ewing) supplied with your letter is revised in line with your proposed spending reductions. The revised FSPS must show credible surpluses. It must be fully adjusted to reflect the decision not to introduce VAT, the uncertainty about alternative revenue streams and the weakening outlook for some existing revenue streams set out in the third quarter fiscal forecasts. The FSPS should be signed off by the Chief Financial Officer, as provided for under legislation, before being re-sent to London for final approval. TCIG will need to bear in mind that an approved FSPS is required before its budget can be agreed for 2013/2014 so there is some urgency”.

The letter added: “I will instruct my team to monitor the financial situation very closely. I cannot and will not allow a reversal of the progress that has been made by the interim government, which is a vital component for the reputation of TCI and its people.”

The joint-letter from Simmonds and Duncan said it is still their view that VAT would provide a “fairer, broader and more stable revenue stream” and that without this, the burden of taxation will “fall on a smaller number of businesses and households”.

According to the letter: “TCIG will therefore need to take steps to constrain expenditure within the legal binding fiscal framework which is now in place, as stated in your (Premier Ewing’s) letter dated January 29th. TCIG will also need to take further steps to build TCI’s credibility with the international financial markets so that you are in a position to refinance without a UK loan guarantee after 2016”.

In a rare but strong showing of bi-partisan unity, Members of Parliament (MPs) from the ruling Progressive National Party (PNP) and the Opposition People’s Democratic Movement (PDM) on Thursday February 1st, voted to repeal the controversial Valued Added Tax (VAT) law.

The Turks and Caicos Independent Business Council, led by prominent businessman and Queen’s Counsel Clive Stanbrook, had also mounted an aggressive local and international campaign against VAT, which would have been introduced a rate of 11 percent.

Premier Dr. Ewing last week raised the issue of VAT at the 24th Inter-Sessional Meeting of the Conference of Heads of Government of CARICOM which was held in Haiti.

On the issue of taxation without representation, Dr. Ewing told CARICOM: “We have made representations to the effect that VAT is not in the best interest of a small economy such as ours and have provided sound alternative revenue generating measures. While we maintain that VAT will not work in the Turks and Caicos Islands, we are more concerned, as you can see, that the principle of Democracy and Good Governance, which mandates that the people of the Turks and Caicos Islands through their elected officials, must have an opportunity to consider any measure that seeks to impose an additional tax burden on them or to otherwise alter their tax structure, is a principle that is being sacrificed on the altar of despotism. If His Excellency the Governor (Ric Todd) refuses to assent to the repeal bill, he would have said in no uncertain terms that the voice of the people is the voice of God, only so long as God and the United Kingdom Government are singing in chorus. I cannot stress with sufficient strength nor overstate the significance of these events. The question is not one of taxation, but rather, one of democracy.”