| Tax increase vexing question: Rumors abound in wake of pay reduction announcement | | Print | |
| Thursday, 18 March 2010 11:05 | |||
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Rumors of increased or new tax rates have made citizens in the Turks and Caicos Islands leery, especially since the news of pay cuts for civil servants. In an interview with the fp, H.E. the Gov. Gordon Wetherell said the current thinking on taxes is not to tax more, but more sensibly. Late in 2009, the interim administration launched a study to review the existing revenue system, intending to enable the TCI to remain competitive, build an adequate level of reserves and ensure the delivery of appropriate public services. The study was conducted by U.K. economist Alan Roe, and his report was made available in February on the government’s web site (tcigov.tc). The 60-page report contains suggestions for streamlining taxes in the country as well as tax collection methods. Now many are asking, what will happen next? “The report is in the public domain, and now we will be consulting further persons, various groups, welcoming commentary,” Permanent Secretary for Finance Delton Jones says. He said a tariff review is already underway with the Customs Department aimed at making changes that bring it in line with international standards, but also “give us the ability to protect certain industries,” Jones said. People should expect to see fewer exemptions and more criteria about how to go about qualifying for an exemption, Jones said. As for fears that taxes may go up in some areas, the governor says that is possible but that other taxes will also go down. He said the exercise is aimed at clearing up anomalies, such dog food being taxed less than baby food. “Baby food is an essential item,” he said, and should not be taxed higher than luxury items. The governor said great consideration will be given to taxes which could encourage growth in local industries, such as taxing prepackaged bread higher than that of ingredients, which is intended to encourage more purchases of locally baked products. So will any of this help the current financial pressures on revenue for the current administration? Chief Executive Officer Mark Capes says not in the short term. “The Roe report will smooth out by adjusting taxes, but that is not going to bring us results in the short to medium term,” Capes said. He did confirm there are other larger projects in the pipeline, but it is still a long road ahead until more revenues will be seen that can save the crisis at hand. The Roe report suggested in the future that the government consider some stable form of property taxes to replace stamp duties, which only produce revenue when property is selling at a steady pace. But Roe said the country should not introduce any new property tax “during periods of serious depression of the property market.”
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