What a difference the contents of a United Kingdom White
Paper makes to its territories .
The Cayman Islands was pretty much left unscathed in the
128-page report issued last week.
But the Turks and Caicos got word Monday that they’ll be
facing an 11 per cent Value Added Tax to be implemented on 1 April next year.
Now those who loudly opposed any talk of a VAT in the Turks
and Caicos want the backers to show them empirical data to back the
implementation of such a tax and, they say, just because the white paper calls
for the extra dosh, it doesn’t mean that a VAT will be imposed.
There but by the grace of God goes the Cayman Islands. While
those who oversee the British territories were looking for ways to bolster
local economies, they considered a VAT for the Cayman Islands.
Thankfully the Miller Report concluded that this form of tax
would harm the Cayman economy and its people.
“A VAT tax is a tax on consumption and therefore would reduce
consumption on the taxed services. There is no evidence of which we are aware
that suggests that the introduction of VAT would actually increase the size of
the economy. In Cayman if VAT were introduced with normal zero ratings and
exemptions were introduced as a replacement for all other taxes, it would shift
some of the revenue-raising base away from the financial services sector to the
rest of the economy, especially the tourism industry,” read the report.
In the Turks and Caicos, Britain has initiated direct rule
in the territory since the ouster of former Premier Michael Misick’s government
and the findings of a Commission of Inquiry that revealed a “high probability
of systemic corruption” within Turks.
There has been hand wringing in the Cayman Islands that we
could become the next T&C because of investigations and budgeting woes. So
far, we have been able to keep our head above water and the UK believes VAT
won’t raise revenues here. Premier McKeeva Bush has promised we won’t see any
direct taxation. But the cloud hanging over our budget remains; it has to be
one that the UK approves.