Businesses in the Turks and Caicos Islands are in revolt over a United Kingdom-backed plan to implement a value added tax for the territory.
A value added tax, similar to a sales tax, has been proposed to come into effect later this year.
The Turks and Caicos Independent Business Council was formed recently by a broad group of individuals from all sectors of the economy and business community, according to a statement sent out by the group this week.
“We have a common purpose in that we are all unified in our opposition to the introduction of VAT in the Turks and Caicos Islands,” a group spokesperson said. “We send a clear warning to [UK] Chancellor [of the Exchequer] George Osborne that we represent the interests of all the leading businesses in the country and indeed it can be said that our views are representative of virtually every business concern.
“We are deeply concerned about the expected negative effects of the hasty introduction of VAT into the islands’ tax structure. As business professionals we do not have a problem with taxation and recognise the need to fund government.
“However, we do have a major problem with this particular type of tax and its inappropriate nature for these specific islands and our unique economy at this time and at this specific point in its young development. We believe that the recent gains in economic sustainability will be lost with the imposition of this ‘boiler plate’, cookie cutter, tax system.
“This new VAT tax is not driven by a ‘grass roots’ initiative, but is a politically driven tax imposed upon us by distant bureaucrats based in Europe without effective due process and regard to our specific economy and its future development. One size does not fit all,” the statement continued.
According to the group, a petition with more than 3,000 signatures has been gathered in opposition to the implementation of the value-added tax, or VAT.
“This is not a done deal as many think,” the statement added. “No government or administration can impose any policy upon a community if that community refuses to accept the policy.
“It is the view of virtually the entire business community in the Turks and Caicos that a VAT tax is inappropriate, costly, cumbersome and unnecessary at this stage in the development of these Islands,” said group chairman Clive Stanbrook. “In the short term, it is clear that the existing taxation systems can be relied upon to raise such extra revenue as may be needed.”
Earlier this month, Turks and Caicos Governor Ric Todd’s office released a statement as part of an ongoing debate over the issue.
“[Value-added tax] is a proven system across the Caribbean,” said Turks Chief Financial Officer Hugh McGarel-Groves. “It is straightforward to administer and is beneficial here in that this single form of taxation replaces five different sets of ordinances that both government and business need to keep abreast of.
“As the community of the TCI continues to discuss the implementation of VAT, critical questions must continue to be asked of both of the government but also of the anti-VAT campaigners: what are their alternatives to the benefits of VAT to a renewed TCI; is opposition to VAT borne from a desire to continue not to pay tax at all in some business sectors?”
Value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material or service. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid.
The UK government has argued that implementation of more measurable taxation schemes throughout the overseas territories to protect the smaller entities from fluctuations in unpredictable industries such as tourism and duty levied on imports.