|VAT discontent growing during consultation||| Print ||
|Written by Richard Greenemail@example.com|
|Tuesday, 05 June 2012 14:52|
The deadline for comment on the introduction of value-added taxes is set for June 19, but some are questioning whether the new tax system is right for the Turks and Caicos Islands.
Bumper stickers that say "No to VAT” and petition drives in opposition of the tax have sprung up, with people from many different walks of life voicing their concerns.
The interim government claims that VAT “will restore fiscal balance, a sustainable economy, alleviate poverty and contribute to other critical social development.”
VAT, which is used throughout other Caribbean countries, will replace hotel/restaurant accommodation tax, communications tax, vehicle for hire stamp duty, and taxes on insurance premiums and financial services.
An online petition at ipetitions.com says VAT is “an experiment that we can ill afford.
“Both the VAT Green Paper and consultations with the recently formed VAT implementation team have made it clear that the practical implementation of the proposed VAT system has not been fully researched, and the VAT impact on the TCI economy has not been fully quantified.”
The petition says the TCI government struggles now to do its job on the simplest tasks and is ill-equipped to handle the complexities of VAT.
Sean R. Astwood, a former deputy leader of the People’s Democratic Movement who has announced his candidacy for the House of Assembly, says VAT will hurt an already hurting economy and increase unemployment.
“VAT punishes the poor and the middle class end consumer,” Astwood says in a position paper on VAT. “VAT cripples small business. VAT increase educational, medical, and dentist cost. VAT will hurt local professional services such as architectural and accounting firms. VAT will make it difficult for a middle class or poor person to purchase a small parcel of land to build a dwelling home.”
About 300 businesses are projected to register to collect and pay VAT, but businesses making less than $100,000-150,000 (not yet decided) will be exempt.
Astwood says that requirement will prompt bigger companies not to do business with unregistered companies which do not charge VAT because the big companies won’t get a tax offset. Small companies that do register will have to pay VAT even while waiting to be paid by bigger, slower paying companies, threatening cash flow.
Land transactions of $25,000 or less that are not subject to stamp duty will have to pay VAT, which could be a much higher percentage than stamp duty, Astwood says.
Payments for medical and educational services will be exempt from VAT, but tax that providers pay on their purchases cannot be refunded. Astwood says providers of those essential services will increase their prices to recoup the taxes.
Government says VAT will apply to professional services like accountants and architects. Core members of the local group Turks and Caicos Architects, Surveyors and Engineers say they already are facing unfair competition from foreign professionals who don’t have to pay for local business licenses, work permit fees, etc. and don’t contribute anything to the local economy. That will only get worse when TCI professionals have to tack on VAT to their prices.
The group wants government to make sure that foreign professionals selling services here are subject to the same taxes, or that local professionals are exempt from those taxes, to create a level playing field. As it is proposed, VAT will be the equivalent of an income tax for these professionals, the group says.
The interim government is gathering comments on undecided issues, including the registration threshold; tax rate; zero rated imports and supplies; exempted imports and supplies; refunds; accounting records, returns and simplified systems; sector considerations; economic and social impact; and transitional issues.
But the government says it will not back down on implementing VAT.
“We don’t have a plan B,” government Chief Financial Officer Hugh McGarel-Groves said recently.
Permanent Secretary of Finance Anya Williams said the idea of VAT is not new in the TCI. In 2005, VAT was included in a revenue plan being considered by government, she said.
In a July 2009 interview, former Deputy Premier and Minister of Finance Floyd B. Hall told the fp: “I do believe … that we may need to convert from an import duty tax base to value added tax.”
VAT public meetings
June 4, 6 p.m.
June 7, 6 p.m.
If you are interested in having special meetings with the VAT Implementation Team, e-mail the team at
, before June 19.
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