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Debate on payroll tax in Turks and Caicos shelved indefinitely
Published on June 26, 2014 Email To Friend    Print Version

Premier Rufus Ewing (L) and Leader of the Opposition Sharlene Cartwright-Robinson

By Caribbean News Now contributor

PROVIDENCIALES, Turks and Caicos Islands -- On Monday, the Turks and Caicos Islands (TCI) House of Assembly was adjourned sine die without a vote on a controversial Payroll Tax Bill. In addition to the payroll tax debate, four private members' motions and a number of parliamentary questions already carried over from previous meetings dating as far back as three months remain unaddressed.

“Whilst we do not know the government’s plan, whether they will allow the bill to go to a vote or withdraw the bill, we do know that there were ten persons present who were voting no. Even if all members from the government were to collectively vote yes, there were sufficient no votes to kill the bill,” said opposition leader Sharlene Cartwright-Robinson.

“We count this as a victory for the people of the Islands. We are awaiting the alternatives that the minister of finance made mentioned of that he had been working on in the event that the bill was unsuccessful. We remain prepared to assisting wherever allowed to address the challenges we face,” she added.

Cartwright-Robinson said that the opposition Peoples Democratic Movement (PDM) was disappointed but not surprised that Premier Rufus Ewing continues to display such immature behaviour in continuing to adjourn the House with items on the agenda and thus wasting taxpayers’ monies.

“There have been two motions on the agenda for several months relating to crime fighting and marine products. Another two motions for less time, but for two and three agendas respectively, on minimum wage and business licenses. A number of questions are also included, which were brought forward from previous meetings. The people’s business is left unattended and the people’s monies are being wasted. Being asked in this climate to support taxes when the best fiscal prudence is not being practiced in the clear view of the public seems reckless to us,” she said.

Cartwright-Robinson acknowledged that the speaker of the house has a role to play but said he continues to allow private members’ business to be left unattended.

“We have written to the speaker on many areas of concern over the past year and have not had the benefit of a response. Only last week we wrote a four-page letter to the speaker about areas of concern and we have not had the benefit of an acknowledgment. We will now take this matter to the next step to ensure that the people’s House is properly managed and that all voices are respected,” she said.

In a position statement against the introduction of payroll tax, the PDM said it accepted the need for a broad base tax and appreciated the financial pressure that is on the government.

However, the official position of the PDM remains opposed to the payroll tax for the following reasons:

• As the minister has admitted that there are alternative revenue measures. We should be absolutely satisfied that any tax being considered is absolutely necessary.

• That the introduction of taxes in this climate is counter-productive to what the government is trying to achieve in raising revenue. There are signs of recovery in the economy and we believe that the government must be careful not to negatively impact this rebound by its decisions.

• That it will negatively impact already overtaxed businesses, sending some out of business while increasing the underground business world. A number of business licenses are being surrendered and many are not certain that it can pay the hiked rates in licenses even after the government has extended its payment by two further months. Unfortunately this is perhaps still not helpful as the summer months are the slowest months for most businesses in these islands.

• That it is not the broadest base possible and seeks to tax a very small pool of residents.

• That the tax is labour intensive and very difficult to police.

• That the concept of employers being included in payroll tax and benefits is philosophically wrong.

• That the bill has conflict of interest issues. There are areas exempted whose rate can be quantified and areas included such as rents which can prove challenging to quantify.

• That the government has not demonstrated that it is serious or wants to collect its arrears. Even now, the government has no accurate arrears list.

• That the government has failed to address measures to cut expenditure in the healthcare area. Its sluggish approach to conducting audits that move the cost overrun from the TCI government to [private healthcare contractor] Interhealth is a major cause for concern. Any major fiscal strategy must include the reduction in healthcare costs.

• That the government has failed to present a sound inward investment strategy and plan, which includes clear rules, simpler processes and aggressive marketing.

• That the rate will increase as soon the government sees that it does not yield as much as it intends and, with the proposed plan to get rid of revenue for business licence rates per their attack on them, will spell loss in millions of dollars.

• That this bill creates a powerful authority that we believe will not be able to manage this new tax and equally a powerful minister who will have wide powers.

• That many loopholes will be found and especially in areas that are already difficult to police with persons avoiding temporary work permits by traveling here on a visitor’s visa. Sec 5(2) exempts persons for low monthly hours and those who ordinarily reside overseas and do not work for four consecutive weeks a year.

• That this is in fact an income tax and will alter the landscape of TCI and how we market it. We further believe that a change from our no direct taxation status cannot be decided upon “willy nilly” and especially in the absence of laying all of the alternatives on the table.

• That the creation of taxes and the approach to tax our way out of a financial mess is seriously flawed and is a lazy approach void of innovation and the widest possible consultation. The prime minister of France in 2011 admitted that austerity measures do not work in these types of economic climate.

• That there must real efforts to seek ways to stimulate the economy and encourage spending and not to take away spending power.

• It will again affect negatively the cost of living as a result in an increase in overhead expenses for businesses that survive. This increase in operating business will be passed down to the consumer.

• That the people’s wishes ought to matter.

During the debate, the opposition also addressed the proposal that the new payroll tax would be collected by the equally controversial national health insurance plan (NHIP), which is current unable to collect its own contributions from residents.

According to one local commentator, there must have been some feeling by Premier Ewing that there might have been some defections from among his own members of parliament, after opponents of the bill made it clear that a vote for the bill would be against those that voted them into office.

“The best thing to do was to never find out. And the best way to do that was two words: ‘sine die’,” he remarked.
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