Following the publication of the VAT White paper in the Turks and Caicos Islands today, Mon, 2 July, Chief Financial Officer Hugh McGarel-Groves responded to the latest news release from the anti-VAT Turks and Caicos Independent Business Council:
“The IBC seems to be set against the people of the Turks and Caicos from benefitting from planned, sustained and regularised income with which to ensure, and 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.
“Their statement has provided an extremely partial picture of what has gone on in other Caribbean countries, particularly Barbados. It has tried to portray the financial challenges of that country as solely down to VAT. This is not correct. VAT was introduced in Barbados in 1997 and the country enjoyed a number of boom years immediately afterwards. 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.
“Neither is it true to say that we have not consulted widely here in Turks and Caicos. This has been discussed as an option 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.
“The content of the White Paper shows that we have taken local considerations into account and tried to strike a balance between the needs of Government and the people it serves, with those of local business: 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.”
