We need to review our present revenue streams and fix all the loopholes first
Some individuals from the International Monetary Fund (IMF) and its affiliate Caribbean Regional Technical Assistance Center (CARTAC) were recently in the Turks and Caicos Islands and held discussions with several individuals including myself. Apparently, they were here on a mission in collaboration with the Government of the Turks and Caicos to review our tax policy and to discuss a possible broad-based consumption tax.
I do believe we ought to review our present structure, but I don’t think we need to add a broad-based consumption tax at this time especially given the fact that our cost of living is at its highest right now. Adding a tax will only create further burden on the average consumer.
Some argue that the tourism industry is volatile and so there is a need to have a broad-based consumption tax. I don’t agree with this argument, and I will demonstrate this below.
The volatility of the Tourism Industry
While the tourism industry can be volatile, I don’t think that this is the reason our country should introduce a broad-based consumption tax. Tourism is really our only industry and so everything we do is centered around tourism. Many individuals are migrating to the Turks and Caicos Islands to work in the tourism industry and when they come, they are living in the apartments that many people are building. If we didn’t have a vibrant tourism industry, people would not be coming here to work.
The real estate market continues to soar and that is because of the tourism industry. Individuals are buying condos and then putting them in the rental market to rent to tourists. Individuals are also buying land to build villas to rent to tourists.
The taxi drivers are doing well because of tourism as many residents do not use taxis. The Airports Authority is collecting millions of dollars because of the influx of tourists. The Supermarkets are making sales because of the tourists and the number of individuals that have migrated to the Turks and Caicos.
Therefore, basically everything centers around tourism, and we have been experiencing this great tourism industry for more than twenty-five years and so I don’t see why we have to tax individuals who are only benefitting from the tourism industry who many argued that are volatile. If the industry is volatile, then why do we want to tax the same individuals who are main beneficiaries of this volatile industry.
Perhaps the Government needs to actively encourage and promote the diversification of our economy rather than relying totally on tourism. A great opportunity exists in the financial services industry. While BVI and Cayman are leading and have developed niches, I don’t think it is too late for Turks and Caicos to gain a foot hole in the financial services industry. We just need to act and stop taking about it.
Review the present structure
The Government seriously needs to review our present structure and I assumed this is being done given the visit by the IMF and CARTAC. Let me remind you of our present tax structure that we tend to overlook
- We are paying duties at an average rate of 30% on most items that are imported.
- We are paying 7.5% CPF which has now been reduced to 5%
- We are paying 10% telecommunication taxes
- We are paying 85 cents (now reduced to 64cents) on fuel
- We are paying stamp duty for the purchase of real estate
- We are paying departure tax and other airport taxes
- We are paying licence fees for our businesses. The telecommunication companies are paying licence fees based on net revenue.
- We are paying annual fees to renew companies with the Financial Services Commission.
- We are paying fees to renew our licences for our vehicles
- We are paying 12% accommodation tax at hotels, restaurants, and watersports
- We are paying 3% for national health while the employer pays 3%
There are perhaps other areas that I have overlooked but the point I am making is that we are already heavily tax. This current structure needs to be reviewed and perhaps there are loopholes in the system where some individuals are not paying or not paying the right amounts. This needs to be fixed.
I think we need to stop using the argument that tourism is volatile and so there is a need for a broad-based consumption. I have seen many other countries introduced VAT and it did not appear to make an impactful difference. I believe there is enough room within our current tax structure. Furthermore, the Government needs to review its expenditure as I believed there are many areas that can be reduced or eliminated particularly with the advancement of technology. People are still travelling all over the place when some of these meetings can be conducted virtually. It does not appear anyone is being held accountable. Individuals are tired of paying taxes. Don’t put any more burden on us. Fix the current issues first and control some of those spending by some of those statutory bodies and Government Departments.