(L-R) Premier Rufus Ewing and opposition leader Sharlene Cartwright Robinson
In a rare display of bi-partisanship, the TCI House of Assembly voted on Friday to repeal the controversial value added tax (VAT) legislation, due to take effect on April 1. The final vote was 16 in support of VAT repeal and 2 opposed.
The news of the vote prompted an immediate and pointed repsonse by Governor Ric Todd emphasising the constitutional requirement that the governor must assent to a bill for it to become law in the TCI.
“I have been informed about the decision of the House of Assembly today on the Turks and Caicos Islands Value Added Tax (Repeal) Bill 2013. Section 73 of the Turks and Caicos Islands Constitution Order 2011 sets out the procedure under which a bill becomes law. I intend to discuss this matter with my colleagues in Cabinet on Wednesday, 6 February 2013,” Todd said.
The repeal of VAT was introduced as a private member’s motion by leader of the opposition Sharlene Cartwright Robinson, who gave what nearly every member acknowledged was a stirring speech in support.
Premier Rufus Ewing seconded the motion and spoke primarily about his government’s inability to do what he called the will of the people. “This is not democracy,” he said.
This was the approach taken by elected and appointed members of the ruling Progressive National Party (PNP) who rose to support the repeal. Their argument was that VAT would increase the cost of living and was not appropriate for the TCI.
Mentioned only by one member was the ostensible reason for the tax -- the pay down of the $260 million loan guaranteed by Britain. This was later picked up by the member from South Caicos Norman Saunders, who said in his opinion the loan only needed to be $130 million.
The governor’s appointed member Lillian Misick spoke out strongly, saying that the premier’s arguments that democracy was not in force were flawed.
In responding to an assertion by Ewing that VAT was not legitimately enacted, in part, because it did not pass in the Consultative Forum with a majority vote, Misick, the former Forum chair, said, "He is wrong. VAT was in fact passed with a majority vote, which means that the premier is also wrong in saying that the governor ignored the advice of the members of the Forum."
Misick also reminded the premier and the opposition leader that the new TCI constitution vests in the governor a prerogative to ignore not just the advice of his government, but any law enacted by it.
"Tthroughout the entire three years of the interim administration our local political leaders did little more than mislead our people with promises to do things they knew they had no authority or power to do," she said.
After the lunch break, the members of opposition expressed their support of the repeal. One member asked why he had not heard from the government members what alternatives they were proposing to VAT. The members spoke of the numerous studies and reports, some from high level persons from the UK, all of which had recommended against the new tax.
Late in the debate, the government’s minister of finance Washington Misick spoke at length against the tax on the basis that the tax had been imposed by Britain. He spoke out against the interim government and then listed his alternatives to the VAT tax, which basically were a one percent increase in the accommodation tax and a tax imposed on tourists involved in water-sports activities. This was a repeat of what Misick had announced earlier. In fact, he repeated his warning that the repeal of VAT will not be readily accepted by Britain and he was ready to submit to firing or prosecutions.
“We may have to engage in civil disobedience,” he said.
No one from either side of the house spoke of cutting spending to create a budget surplus. However, the cost of the National Health Insurance Plan was mentioned by three opposition members.
One of the last members to speak was former chief minister Derek Taylor, who reminded Washington Misick that when Misick was chief minister he had to engage in redundancies to balance his budget.
“This resulted in our leadership of the government in 1995 until 2003 a period when we expanded the economy,” said Taylor.
VAT was approved by the then Consultative Forum and signed into law in July last year.
Britain’s Foreign and Commonwealth Office (FCO) has rejected all attempts by the recently elected PNP government to defer its implementation for at least six months, unless or until a viable alternative to VAT is proposed.
VAT has been embraced by the FCO as the way out of the financial difficulties facing the TCI. Massive malfeasance in office and systemic corruption on the part of the former PNP government, coupled with debts and liabilities associated with the National Health Insurance Plan and two new hospital buildings, left the TCI some half billion dollars in debt, requiring Britain to guarantee a $260 million loan to prevent default and bankruptcy.
Chief financial officer Hugh McGarel-Groves believes that VAT is the only way to bring the government from yearly deficits or break even to a surplus, which will not only cover the health costs but also service the remainder of the debts.
However, McGarel-Groves has admitted VAT may raise the prices of taxable items by 3 to 4 percent. The politicians believe the costs to islanders will be much higher.