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 GoA revenue.
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.
A VAT will Not help. It will be complex, cumbersome and expensive to operate. The answer is a simple straight-line across the board Sales Tax coupled with a reduction or zeroing of Import Duties for Certified Importers. This way the comsumer does not have the burden of the Sales Tax being imposed on already dutied goods which will increase the costs by the margin of the Sales Tax.
ReplyDeleteThe Import Dutied will remain so that when we go overseas and purchase goods, rather than purchasing them here from our Businesses, we must then pay the Duties.
The Merchants and Businesses would have to be regulated with respect to their mark-ups so that they do not gouge the consumers by taking the cost reductions realized by the abolition of Import Duties for them and add the Sales Tax to the current prices for their products, notwithstanding the lower costs. The purpose of this new system would not be to enrich the businesses at the expense of the Tax Payer, but to provide relief through a lower retail price (notwithstanding the added Sales Tax) to the Consumer, to provide a larger volume of Revenue for the Treasury through the Sales Tax and, at the same time, to permit the businesses to continue to make profits AT THE SAME LEVEL AS BEFORE the abolition of Import Duties for them.
So, they have to be kept in check and guard against the temptation to automatically increase their Profit Margins by keeping the same prices for the goods despite the lower costs of these goods in their stores. Their Mark-up can remain at current levels but it must be calculated of the new lower costs of the goods landed in their stores. Then, on this lower price the Sales Tax is levied. Since the Sales Tax will not, in most cases, be the same as the dropped rate of Duty for the item, the Price to the Consumer, inclusive of the Sales Tax will be LOWER! Yet the Government would realize greater Revenue f4rom the Sales Tax than they would have on the Import Duties for the items, given that the sales Tax will be levied on the Retail Price of the goods. Revenues will be increased by at least 300% to 600% over current Import Duties Revenues for the same goods.
There is no need to Increase any other Tax already in place. as a matter of fact the tendency should be to Decrease these rates so that more persons can pay them thereby leading to greater sums collected. For example, last year with the horrific increase in motorvehicle taxes many persons did NOT register all their vehicles, especially in the heavy equipment sector. With a real reduction of these rates these persons will be able to afford to register ALL their vehicles and the Government will collect a greater sum in Revenue. greater volume with a smaller mark-up leads to greater revenue.
Finally, there is a drastic need to collect ALL monies owed by ALL persons to Government.
There is no need to increase ant Taxes, or to introduce any new taxes except the Sales Tax coupled with the removal of Import Duties for the Certified Businesses.
Whatever the gentleman's recommendations are, the Government of Anguilla need be aware that the destruction of Anguilla as we know it is guranteed if there are new or increased Taxes, except for the Sales Tax as above.
The day after the election, our new CM announced: "In outlining his Government's priorities, he said the first priority would be
ReplyDeleteto bring harmony, peace and goodwill to all. The second priority is to address the country's finances and he said he aimed to
ensure that money went into the treasury and money owed to the Government was judiciously collected."
--The Daily Herald, 17 February 2010
I hear that the Attorney General has been asked to pursue the collection of certain unpaid taxes and fees in the courts, but he
has stated that there are deficiencies in our laws which could make it difficult to prevail in such cases.
I thus suggest that the CM instruct the AG to align the AG's priorities with his own by assigning someone to making whatever
simple revisions are needed in the existing laws and bringing them to the House for approval.
How soon can we expect this to happen? This will tell us if Hubert is serious about collecting back taxes or simply making
speeches about it.
Don,
ReplyDeleteOver the years, you have alluded many times to the non payment of existing taxes by busineses, the privileged, the theft of government water, the absence of fines for the mining of sand and the flaunting of building and zoning codes.
We have a new CM that admits to not having paid property taxes for years.
Let us hope Mr. Roe has is made aware (hint, hint), of these allegations.
Simply revamping the tax/revenue structure does not address the present delinquencies.
The simple answer is "yes", yes, Alan Roe’s visit to Anguilla result in increased taxation.
ReplyDeleteTo make a corollary of Parkinson , a state expands to consume its available resources.
Like the proverbial dog, the state steals because it can.
It's easier to keep a degenerate gambler from betting his rent money than it is to prevent a government from taxing away yours.
The only conclusion Alan Roe can possibly come to is quite simply this.
ReplyDeleteNO NEW TAXES TO BE IMPOSED ON ANGUILLIANS!!!
LET THE NEW GOVERNMENT GOVERN !!!!!
GIVE THE NEW GOVERNMENT A CHANCE TO REDUCE GOVERNMENT SPENDING AND LIVE WITHIN THE REVENUE STREAM.
"Giving money and power to government is like giving whiskey and car keys to teenage boys." -- P. J. O'Rourke
ReplyDeleteANGUILLA WILL SAY “NOE” TO ROE !!!!
ReplyDeleteThe Express (U.K)
BOTH major political parties were forced to deny plans to slap VAT on basic food and raise the headline rate of the tax yesterday.
It followed claims the move was being secretly discussed between civil servants, industry bodies and retail insiders to cut the national debt.
Applying the sales tax to basic groceries, which like children’s clothes, newspapers and books are exempt, would be hugely controversial.
One industry source said: “They are thinking the unthinkable. It might not happen but don’t think that people are not having that conversation. They are.”
In a strongly worded statement the Treasury said there was “absolutely no question” of Chancellor Alistair Darling imposing VAT on groceries.
Children’s Secretary Ed Balls said he also did not expect any VAT rise under Labour, and provoked fury by claiming the speculation raised questions over whether the Tories planned a hike.
A spokesman for Shadow Chancellor George Osborne said: “This is absolute nonsense. We have never had any discussions on this.’’
The Treasury has revealed that in 2008 it considered but ruled out raising VAT to 18.5 per cent in 2011-12.
COMMENT:
18.5% VAT ?
VAT ON BASIC FOOD?
SAY ’NOE’ TO ROE AND THE BRITISH TAXMASTERS!!!!
NO BLOODY BRITISH SYSTEM OF TAXATION!
The British tax system has done Britain no good at all.
ReplyDeleteLOOK AT BANKRUPT BRITAIN WITH OUTRAGEOUSLY HIGH TAXES.
TAXES ARE NOT AND NEVER WILL BE THE ANSWER TO PROSPERITY.
LEARN FROM THE MISTAKES OF THE UK, EUROPE, US, etc, etc.
THEY ALL THOUGHT THAT TAXES WERE THE ANSWER, WHAT A LOAD OF RUBBISH.
YOU WILL NOT TAX ME TO PAY HUGE SALARIES, PENSIONS, SEVERANCE PAY, TO EX MINISTERS, EX SPECIAL ASSISTANTS AND OTHERS.
In good times the absolute government spending levels go up. In bad times the tax rates go up so the percentage of the economy the governments take goes up. So with each up/down cycle governments get bigger till eventually things fall apart. Then there are revolutions and wars. Much of the world is about due for revolutions or wars. Anguilla is not as bad off as many places because our revolution is more recent.
ReplyDeleteEven the Swedes are running, not walking, back up the path that Anguilla and the US are going down... http://www.youtube.com/watch?v=ENDE8ve35f0
ReplyDelete