07 March, 2010
The big question is, will Alan Roe’s visit to
Anguilla result in increased taxation? The short answer is that, if it does, it will have to be imposed by us, implemented by us, and paid by us. Of course, he might well make recommendations for removing some taxes, as well as bringing in others. Hopefully, we will get to see his report at some early point, ie, if the Government of Anguilla puts it on its website, like the Turks & Caicos government already did. I believe that Governor Harrison has the right ideas about transparency. Hopefully, it will be up to him whether the GoA goes public with the draft report.
Even then, Mr Roe’s output will only be a set of recommendations. They will not be binding. It will be for the politicians and their technical staff to decide whether his report should be implemented.
Whatever changes he recommends, would it not be better to collect what is out there first? We know that many residents, local as well as non-local, have been evading existing taxes for years. Over the past 25 years, the preferred way of doing business in
Anguilla has been to encourage the employment of local fronters to negotiate exemptions from taxes on the basis that they were “local” businesses. Every sort of enterprise in Anguilla was available, if the price was right and so long as the privileged few got their share of commissions and the famous “ten percent”. Social Security contributions, accommodation tax, property tax, customs duties, planning prohibitions, hospital bills, electricity bills, and water bills, were all ignored with impunity on the basis that the Anguilla Government would not “criminalise” the ordinary Anguillian. Who knows, but there may be tens, perhaps hundreds, of millions of dollars in uncollected revenue out there waiting for an efficient collector to come along.
Whatever new taxes are proposed, they better be cost-efficient. No point in proposing to raise $100 if it costs $200.00, or even $50.00, to collect. Income tax and company tax would be subject to the problems of all small-island economies. The tax inspector and tax collector would be a family member or friend of the tax payer. With no audits required in this economy, everyone will lie. Those who can shift their income overseas will do it. Less cash will circulate, and the economy will shrink.
What about rationalising revenue heads? Out of the 150 existing ones, only about 5 of them bring in 90% of all
Will imposing a Value Added Tax really encourage Anguillians, as has been suggested, to go to St Maarten and buy there in order to bring in the stuff duty-free? Given that merchants will have lower landing costs (if Customs Duty is removed at the time VAT is introduced), there should not be such a major increase in the sale price of goods as to make overseas purchasing worthwhile for the average household. Of course, we cannot see the guys selling BBQ food in The Valley charging 17.5% tax, nor the fishermen.
If our revenue depended on taxing businesses like those we would be in really serious trouble.