TCI in battle over introduction of VAT

| 13/06/2012

vat_returns.jpg(CNS): Officials from the Turks and Caicos Islands government are defending the proposed introduction of VAT in the face of local opposition to the sales tax. The interim British administration currently running the island, after the country’s constitution was suspended amongst a major corruption scandal, says it needs the purchase tax to help it plug the hole created by the previous government’s alleged corruption and mismanagement of public money.  Chief Financial Officer Hugh McGarel-Groves said Introducing VAT would strengthen the country’s fragile recovery with a simpler, equitable and stable source of government revenue.

Hitting out against those opposing the tax McGarel-Groves asked this week what alternatives there were to the benefits of VAT and suggested the opposition to it was from those who are currently paying no tax at all.

“Given the difficulties endured by the TCI economy since the collapse of the last government, it is in the best interests of the entire community to ensure that government finances are secure and that it can continue to develop expenditure plans in line with local peoples’ priorities,” the chief financial officer said.

He added that VAT was a proven system across the Caribbean and would be straightforward to administer as a single form of taxation replacing the five different sets that are currently levied in the UK territory.

During Cayman’s own budget difficulties in the wake of the 2009 election, the then Labour government in the UK had suggested that the government here consider the implementation of a tax and the premier had originally indicated his preference for VAT over income or property tax but in the end opted for increasing existing fees.

Speaking in April 2010 during efforts to borrow some $300 million to help balance the budget, plug a government deficit and pay for capital projects, McKeeva Bush was forced to seek permission from the UK, which was pointing towards the need for Cayman to widen the tax base.

Bush said if he had to choose he would introduce a “value added fee” and had indicated that Cayman would eventually be forced to implement some form of taxation. Bush said VAT was fairer because rich people spend more so they will put in more.

The TCI government said it is suggesting VAT not to increase revenue but to simplify the local taxation system. It said the VAT is not an additional tax but will replace several other complicated taxes, such as the Hotel & Restaurant Accommodation Tax, Vehicle Hire Stamp Duty, Domestic Financial Service Tax, Telecommunications Tax and Insurance Premium Tax. The introduction of VAT will also partly replace import duty and start to address what the government said were excessive and unfair benefits some businesses receive via import duty concessions. 

“VAT is a broad based tax and will spread the burden across a larger portion of the economy, including the service sectors, which currently pay no sales-related tax,” the government has claimed.

The government in TCI denies that VAT will make the islands less competitive as the proposed rate of VAT will be between 8.5% and 12%, no higher than the majority of regional countries that have rates between 15% and 17.5%. Some four studies have been conducted over the last seven years comparing TCI’s existing tax system with alternatives and they conclude that VAT is the most appropriate type of tax for the country.

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  1. Truth says:

    VAT is BAD but CIG is much much WORST.  How to pay for all the corrruption and incompetence is the question VAT answers.  Asking CIG to come up with a soution to the problem of CIG shows the incredible foolishness of the Caymanian people.  Again.  The REAL solution is to put the task to experianced and skilled people.  And then let them work unhindered.  Anyone see that happening here soon?  This in itself would tell any fool that Caymans days of self destruction will come to an end one way or another.  The choice is up to….you guessed it.

  2. Annoymous says:

    How I see it if the UK comes here after TCI and introduces VAT, then we won't have to worry about DART, he'll be gone.  It has been said that he hates paying taxes, so could this lemon actually make us a Tall Sweet Glass of Swanky???  

    • anonymous says:

      the problem with Dart leaving is that you will have no sugar to put in that swanky…in fact you probably dont have water…in fact you probably will have to mix that in a callabash….in fact someone would have stolen yourcallabash by now…

      While Dart is not the only one keeping this economy floating they have pumped in $800Milion over the last 5 years…thats $813,500,000 more than the English so careful what you wish for.

      Why $813,500,000?? ..I added the cost of Tempura and 5 years of salary/expences for Governor which we paid for!



    • anonymous says:

      And we that will be stuck here like paying taxes while hope to afford a little swanky???

    • noname says:

      You need to let the Dart thing go.  We get it already.  Your jealous and petty.  Understable.  He makes Caymanians look lazy and uneducated.  He makes your leadership look corrupt and incompetent.  He builds things like he means to finish them. What a show off.  And he owes you nothing.  Get over it.  Soon it will be time to blame the UK for all your many problems.

      • Anonymous says:

        Anonymous 7:44

        Your comment loses its punch when you don't know how to spell.

        Besides, what the poster said was true. Dart does NOT like to pay taxes. US tax laws were changed because of him to try to catch people like him.

        Pay attention.

      • Anonymous says:

        Although I am sure he has sigificantly increased it Mr. Dart inherited his fortune. He doesn't lmake Caymanians look any way at all. What comes across in your post is your own ignorance and bigotry that you would dismiss Caymanians generally as "lazy and uneducated" when many of us are far from either.     

        • Just Commentin' says:

          Uhhh…come again? If Dart "significantly increased" his fortune, then he did not inherit "his fortune": actually through strategic manipulations Ken Dart gained substantial control of the family trust – "a fortune" – and through sheer financial genius he played it to his advantage into a vastly larger fortune (in about the same time frame that the Cayman Islands slid into near bankruptcy and went to hell in a hand basket, I might add).

          I would opine that your lack of knowledge about how the most powerful man in the Cayman Islands built his wealth is symptomatic of a lot of people in these islands, they hold themselves out to be so "educated" but the minute they open their mouth theyprove themselves to be clueless.  I wonder: Have you ever bothered to familarise yourself with actual facts about Ken Dart's history? His financial dealings? His citizenship history? His political history? How he actually built his personal wealth? His legal problems with the IRS? His "vulture" fund dealings?

          Kenneth B. Dart man is the single and all-time most influential man in the Cayman Islands, period. Surely any truly "educated" Caymanian would know as much as possible about the man, no? Yet, I will wager if you ask where Ken Dart was born, or his age, most of your so-called "educated" Caymanians would be like, "Uhhh, the U.S….somewhere…uhhh…maybe he is in 40's or maybe 50's…I dunno too much about the man other than he is Makeewah's good buddy".  I will bet you  that many Caymanians (maybe yourself included) if asked how Ken Dart made and continues to build the lions share of his wealth, an incorrect answer would be given by most of them. (Hint, it does not hold hot coffee or warm croissants, ok?)

          OK, let me agree with you on some points you make: by a Third World metric Caymanians are kinda well educated, or a fair number of them are at least educated enough to have struck an "X" in the voting booth; they are not so lazy in that a fair number of them made it to the polls in the last election. However, a significant number of Caymanians well deserve a dunce cap for who they elected, and very large number of Caymanians deserve a big brightly coloured "I AM AN IDIOT" badge for the fact that they sit stupidly by and allow this government to continue wrecking their land and their lives. Lots of Industrious and educated fools roun' yah: not really something to brag about in my book.

          To his credit for being a helluva lot more intelligent than we are as a people, I am confident that if Ken Dart had any executives in his organisations as stupid and incompetent as our leaders he would have fired their sorry a$$es a long time ago. We sit on our hands and moan.

          Maybe we are not lazy and uneducated, but judging by our leaders and the horrid constitution we voted for, and the current condition our country is in, we sure don't come across as being very damn smart, now do we? One look at our leader, one earful of his horrid grammar and you can hardly wonder how people form a very poor opinion of Caymanians. You can't fault people for judging us by our leader, can you? Leaders are supposed to personify the best of a country. Case closed.

          If tings get any wuss roun' yah,  I will probably end up putting a paper bag over my head when out and about among expats. Being Caymanian (even if educated and industrious) is less and less something to buss out wit pride about.

          Gee, dude, it is kinda hard to convince anyone that Caymanians are not lazy and uneducated when we have morons as leaders and our government is pretty much bankrupt. Nice try anyway.

  3. Anonymous says:

    Having seen the effects of an introduced VAT on small businesses elsewhere I feel sorry for the people of TCI and I fear for Cayman. It is a horrible tax, extremely costly and complex to administer. It would destroy many small businesses that are already struggling and would require a massive enlargement of the civil service just to get it off the ground. I hope that Cayman can survive long enough to throw the current wasteful government out and put the country back on a sound financial footing.

    • 30 Helens Agree says:

      It really is not that complicated for 95% of users. 

    • Anonymous2 says:

      Unfortunately the UK will tax us whether or not we are under a wasteful government… they could care less what direction we take. Don't be so naive to the nature of colonialism

      • Xpat says:

        The UK is seeking to install VAT as a tax in T&C. The money is to go into T&C Govt coffers. So no the UK wouldn't be taxing Cayman as you put it, as in saying so you suggest the money goes to the UK.

        VAT would be a disaster in Cayman IMHO as no-one would abide by the rules, and no-one would be prosecuted for failing to abide by them. It would be the same as with pensions, far too many collecting money from others, but somehow unable to part with it later on.

        Finally, could we get the phrase right in Cayman? It's "couldn't care less", not "could care less". It has a logic to it, if you think about it, but it's usually misstated here.


        • Anonymous says:

          I am an older Caymanian and its only recently  that I have been hearing "could care less".  Like you said, there is some logic in "couldn't care less" and that is what Caymanians say, so this new arrival saying is not 'Caymanian born' Johny Come Lately my dear.

  4. Anonymous says:

    The way this country is being mismanaged it won't be long before this happens here. Bush et al are giving the UK every reason to step in.

  5. Chris says:

    Would you give an alcoholic friend more alcohol hoping it will help solve his problem?

    Giving the CIG more money is not the solution. Cutting excessive spending is! Look at all the auditor general reports; none claim government inefficiencies as a result of a lack of funds.

    To the contrary, money being wasted in so many areas seems to be the dominant theme.

    So the common sense solution is to reign in spending, do not introduce new taxes, especially not VAT!  Cayman beware! We see the UK govt's idea of a "well run" Caribbean territory.

    The moral of this story is we need to do whatever is necessary to ensure the UK does not suspend our constitution and implement these insane revenue measures under the guise of "good governance".

    • Anonymous says:

      But, we have not done anything yet. No accounts, no budget, etc. No cuts in spending. Money to churches, paving in the Brac, etc. Perhaps we need to hit bottom and have the UK step in. Yes, it will hurt but I believe we can then begin the slow and painful process of recovery. It will take 10 years.

  6. Anonymous says:

    The introduction of VAT would transform the local business environment, requiring, for example, that all businesses serving the local market to keep accurate accounts in order to be able to claim back the VAT they paid to upstream local vendors versus that collected from their customers.

    Those accounts would presumably have to be submitted monthly to CIG for verification and payment, thus providing CIG with a truer picture of how business is actually conducted in these Islands.

    Imagine how this might work for taxi drivers?!? Having to keep gas station receipts versus fare receipts. Meters would be a necesssity.

    Unfortunately, many small businesses would not be capable of the transition, leading to a consolidation of the market, higher entry level costs, a rise in prices generally and complaints from those disenfranchised.

    There would almost certainly be a further development of our black market economy but the larger issue for local entreprenuers would be worrying about letting CIG look into what they are doing and how much money they make.

    Can CIG be trusted with such information?

    Would Corporation, Payroll and Capital Gains Tax be far behind?

    We already have a big problem between the businesses that pay the legally required pension and health contributions and those that don't. Obviously, those that don't have a huge advantage in their pricing, and busily bad mouth their more honest rivals for "ripping people off".

    Therefore, on the face of it, and properly administered, VAT might help to level the local business playing field, provided our politicians and civil servants can be trusted to realize that small business is the heart beat of these islands and not just a cash cow provided for them to fund their wildest egotistical and/or populist agenda.

    So, …………………..not a good idea then.

    • Libertarian says:

      It doesn't surprise me one bit… they would drop the TAX bomb on TCI and then when they desperately want their Independence, let them loose to be eaten by the vultures.

  7. Free Speech says:

    And I remember when McKeeva Bush saved Cayman from Chris Bryant's property tax, when he suggested a VAT tax, how opposition went on so stink about it. Now they complaining about high fees and duties. Talk about kettle cussin pot! 

    • Anonymous says:

      HAHAHAHA Mac 'saved Cayman from Chris Bryant's property tax' LMAO!!!

      That's rich!

      What BS!

    • Anonymous says:

      What McKeeva Bush needs to do is save Cayman from McKeeva Bush.

  8. Knot S Smart says:

    Thank God we dont have to worry about new taxes here.

    In a few days it will be announced that we have a surplus and that we borrowed 100 million to cover the deficit and this left us with 5 million in surplus…


  9. Whodatis says:

    Yet some people wonder why I stay on the UK's ass at times like these?

    As if we don't know what is the ultimate objective of the UK / FCO in all of this.

    Tell me FCO – how has that good old long-standing VAT worked out for your economy?

    My fellow Caymanians, stay on your toes – watch these characters and entities very, very closely. (Video)

    *Re: "He added that VAT was a proven system across the Caribbean … "

    Are you kidding me, McGarel-Groves / FCO / UK?

    Are these clowns suggesting that it is possible and prudent to apply a one-size-fits-all solution to a region as economically diverse as the islands of the Caribbean?

    Therefore, we should regard TCI's economy as similar to that of Trinidad & Tobago's, or Cayman's to that of Haiti's, correct?

    Furthermore, they are making these decisions in the absence of the perspective and concerns of the actual TCI business community and general public.

    As per usual, the UK / FCO regards the regional BOT's as a side-issue without an ounce of respect, understanding, and genuine consideration.

    However, do not take my word for it – read and watch for yourselves.

    * The most disgusting thing in all of this will be the way in which many in our very midst will immediately side with the despicable actions and attitude of the CFO simply because he is backed and sponsored by the FCO / UK. They too will callously disregard the concerns of the collective TCI community and latch on to the rulings of this arrogant and ignorant Johnny-come-lately. However we can only assume they have their reasons for doing so. (If you found this particular paragraph offensive, then yes – I am referring to you.)

    P.S. Hate me till the cows come home folks – the UK establishment has proven themselves via history on many occasions. Nothing could ever be said to convince me otherwise, and as depicted in the above links – the UK / FCO is staying true to form.

    Absolutely disgusting.

    • datisme says:

      Imagine if the best the UK could come up with for a leader would be a man with a 5th grade education in how to fail at everything and then listen to him.  Just think how happy "Whodatis" and the rest of the Bushits would be.  He is right on one thing though.  The only way to make Cayman look smart is to make everyone else look like bigger fools.

      • Whodatis says:

        What is a "Bushit", and why exactly am I categorized as a member of the group?

        • datisme says:

          Those that still belive in da "Bush" as their honorable leader, premeir, and pipeline to the money tree qualify as do the followers of the paid for by Bush churce.  You know.  The Bushits!  Like the Israelites!

           Never mind.

          • Whodatis says:

            Ok, but again I ask you; "why exactly am I categorized as a member of the group?"

            That was a 2 part question – in case you missed it.

      • Anonymous says:

        You XXXX! he is  the same 5th grader that allowed you to be here soaking up the sun and living like hog on a hill.

        if you do not like this 5th grader to be your leader, then go back to your oxford leaders. seem like your educated leaders could use a little of the Premier's common sense and vision.

        keep giving your money to the EU. keep all your imported criminals in your back yards…you cant even get them deported.

    • Anonymous says:

      We need to look at 'why' the UK had to take control in the first place.

      We can't 'blame' the UK if we keep increasing the size of CIG, wasting money and then have to turn to the same people you constantly criticize. 

      Try hard to remember youmight be wishing and praying for the UK to be out of the picture but remember we don't have too many English residents, relatively speaking and when they leave and other foreigners who can return to countries with decent economies …. who will take care of this increasingly welfare state? Our Caribbean 'friends'?

      The same countries that got rid of  British rule and failed their own people now have a serious plan to convince us the UK is the worst thing that ever happened to us? Really?? If that was true why are so many running here to be under British rule again?

      Why are persons with such animosity towards the UK expecting to live in a system with no accountability but still expect the UK (who'll have to tax their own citizens, even if they live in Cayman now) to ultimately bail us out?

      Also, last time I checked, despite its historical wrongs (yes I agree that's a fact),  I don't hear any news of UK citizens killing each other on a daily basis, so should be using people who are murdering on a daily basis now to be our role models? 

      Time to stop the blame game and demand accountanility from our own people, period!

      • Whodatis says:

        I recognize you and your same old argument.

        You are clearly opposed to everything that "Whodatis" has to say, even if it means underminding the capabilites of your own people in the process.

        People like you disgust me.

        Anyway, did you even watch the video before deciding to add your 2 cents?

        Clearly not.

        Kindly educate yourself to reality and try to get over your fear of and animosity toward Jamaica. Most of all, please refrain from injecting regional countries into the argument under the false premise of me regarding them as examples for us to follow.

  10. Anonymous says:

    Once you have a VAT in place, it will only continue to rise to fill the hole that the governement is.

    Taxes are an excuse to raise them

  11. Anonymous says:

    It's on its way Cayman. The free lunch is over, personal responsibility for your own revenues and society is becoming inevitable as the hole gets deeper and more accounts of misuse are uncovered.

    • Anonymous says:

      Cayman government has plenty of money coming in–$500,000,000 or so. All you have to do is stop spending $100,000,000 a pop for things that are only worth half that much.

    • Anonymous says:

      So true! Cayman beware!

    • Anonymous says:

      Yeah, and guess what? They did it to themselves.  All these self-serving, freeloading civil servants and politicians who abuse the government benefits and coffers like it is their own personal piggy banks, guess what?  The chickens are coming home to roost !  And the chicklings and roosters too!   Coz you very soon will have to start paying taxes too, because of all these fuel card abuses, cinico abuses, telephone call abuses, politicians double dibbing salaries and pension abuses, free paving abuses, money to churches abuses, homes in west bay getting solar panel abuses, contract awarding abuses, first class travel abuses, and so on and so forth.   And when cost of living gone too high due to taxes, the expats will up and leave and you will be left alone to pay the debts !  So civil servants and politicians, start girding up your loins and tightening your belts and start paying some of your own pension and health contributions and stop abusing the fuel cards and travel benefits, etc. and do like what the private sector has already been doing since the recession hit – TIGHTEN YOUR BELTS AND SPEND LESS ! 

      • datisme says:

        Yea!  that will make them change their ways.  As soon as they think the end is near watch as all the rest of the money dissapears.  This is what you should expect from your honorable leadership.  And the many who live off of the trickle down.