War of words heats up over VAT in TCI
(CNS): Following accusations by the newly formed Turks and Caicos Independent Business Council (TCIBC) that the territory's governor’s office has circulated “gross inaccuracies and wildly misleading information” in connection with the proposed introduction of VAT, Hugh McGarel-GrovesChief Financial Officer said as business people the council should understand the importance of stable cash flow. TCIBC Chairman, Clive Stanbrook, QC said that there had been no consultations over the implementation of VAT and questions had not been properly addressed. “The accepted rules of governance have been ignored,” Stanbrook said last week.
“The consultative bodies that they themselves have set up have been treated as a mere rubber stamp. They have been given less than two weeks to consider and assess complex legislation of a type that will have a profound impact on the economy of the Islands.
“To make matters worse, in this crucial period the Governor is taking a holiday. The Interim Government's claim to have consulted the people of the Turks and Caicos is a complete sham and provides no respectability for rushing through important legislation for the restructuring of taxation in the TCI against the wishes of almost everyone in the community," the chair of the body campaigning against VAT stated.
Meanwhile, on Tuesday McGarel-Groves said the IBC seemed to be set against people benefitting from “planned, sustained and regularised income” which would enable government to invest in, essential public services.
“Government revenue has fluctuated wildly over the past few years. VAT helps prevent this. What do we do if revenue drops again without VAT – close schools? More than anyone else, business people should understand the importance of stable cash flow.”
The UK official said the group was presenting a “partial picture of what has gone on in other Caribbean countries,” particularly Barbados where the challenges of that country are not as implied by IBC solely down to VAT.
“VAT was introduced in Barbados in 1997 and the country enjoyed a number of boom years immediately afterwards,” said McGarel-Groves who is behind the drive to implement VAT in TCI. “The IBC claims ignore wider economic issues and do not take into account that both income and property taxes are payable there, and elsewhere in the Caribbean, in addition to VAT. That TCI has neither of those taxes here, and has proposed the second lowest rate and the highest VAT threshold in the Caribbean, we believe offers the country an ongoing significant competitive advantage.”
The UK public finance officials said it was not true that the government had failed to consult the people and the issue has been up for discussion since 2005.
“The Green Paper – intended to generate discussion before decisions were made - was distributed widely to the Advisory Council, Consultative Forum, numerous business Associations, individual businesses and members of the public. We held more than 30 sessions with various groups. The accusation that we could not provide all of the answers is also misleading as many of these answers could only be provided after consultation in the White Paper, such as dealing with Strata corporations, which is the factual statement of Government policy and published today,” he said.
McGarel-Groves claimed that the white paper published Tuesday shows local considerations have been taken into account. “VAT is a replacement tax, prices should not rise; we have made a large number of items zero rated or exempt from VAT to help both the consumer and the construction sector, for example; we have carefully considered how to implement VAT and to ensure effective compliance,” he added.
The Turks and Caicos Independent Business Council (TCIBC) began a full scale campaign against the proposed VAT last month which they say is inappropriate for the islands’ economy. It has accused the British bureaucrats of imposing a cookie cutter, tax system that won’t work in the Caribbean territory. Some 3000 people have already signed a petition and the TCIBC believe the UK cannot impose a tax that will be rejected by the community.
|White Paper PDF.PDF||837.54 KB|
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