Recently the government reduced the 15 percent tax on freight and insurance on building materials, which was introduced in July. Certain building materials, including cement, sand, steel rods and blocks, will now attract a reduced tax on freight and insurance of five percent ("this current tax reduction"). These measures are good and the government should even go a few steps further in cutting taxes, costs, freight and the cost of doing business in the Turks and Caicos Islands (TCI).
Any reduction in taxes is a good idea and the government, at least this one time, needs to be congratulated on this. Certainly building materials, cement, sand, steel rods, and blocks need a relief because this impacts many people and the growth of the islands. Let us see if major building suppliers and all the other building materials suppliers will fall in line and reduce their prices accordingly. In 2008, when the government removed duties on building materials, those prices actually went up. However, today, some five years later, this is an opportunity for genuine tax reform and a move to a lower, fairer base of taxation, which presents itself as the government looks for new ways to raise revenue.
While new measures to raise revenue are found, past debt, improperly incurred debt such as the hospital deal or the $100 million lawsuit with the Conch Farm, should not be paid, avoided and classed as "odious debt". True tax reform should not condone ways to burden the people with bad debt that came about because of British collusion, pretending and assisting with bad deals. Ideally any increase in taxes would only go to service, facilitate, cover, condone and make room for bad deals that were incurred in the past. There is no way with the tight secrecy on the hospital scam, the Provo Stevedoring scam, etc, that revenues should be raised to facilitate them while people suffer. This is evil and this is bad.
Seriously now this measure or idea to reduce taxes does not have to be controversial and as such we should face this with confidence. This current tax reduction should also be considerably monitored by the government and the suppliers for a positive effect, meaning that if they actually reduce taxes prices should go down, cost of living should go down; consumption and spending will increase. Government would then get more revenue as opposed to less revenue. Government should measure its revenues on building materials after this reduction goes into effect between July 31 and December 31, 2013. I would hazard a guess that revenues will increase. This is not a manufacturing or textbook economy so price control should be seriously considered. So it is time to throw away the Economics 101 textbook because it cannot work in the TCI.
It should also serve as a reminder to all governments that willy nilly increases in taxes do not actually help economies. No! They hurt! Tax increases should be fought by government, opposition and the public. Government, the opposition and the Blue Ribbon Commission should also gauge and monitor this current reduction in taxes to see where government revenues and receipts will go after this reduction goes into effect.
Accordingly, government should start with an across the board reduction in taxes. Roll back all existing taxes which taken as bundle and added up would be at least 40% of our income per person. So let us remove the 12% accommodation tax, remove the 6% customs processing fee, remove the duties, remove stamp duty on land, remove telecommunications taxes and replace all of these high taxes and all taxes with a 4% VAT, or a 4% consumption tax, or a 4% tax of any nature. Instead of there being a shortfall I promise the following can only happen.
1. TCI gets to market itself and the islands as a low tax and fairer taxed jurisdiction.
2. There would be more inward and locally existing investment.
3. There will be new money, new capital and new finance.
4. More developers, more investors and more banks would come here.
5. The TCI would begin to expand as an economy.
6. There would be more growth, more jobs.
7. Government with lower taxes would cause more spending, more manufacturing, more building, more investment, more consumption, more capital development and more resorts,
8. Government would more than likely spend $215 million and collect at least $350 million, a major budget surplus.
9. All graduates would be able to get a scholarship, which at the end of the day, is what this thing of running a country is all about. Nothing else.
Please embrace this opportunity. The poor could live, we all can live, prices and the cost of living go down. The islands can then retire debt, remove the $260 million guarantee for loans, remove the grip we are under, reform the constitution and remove the chief financial officer (CFO) and deal with real issues. You, the government, will find that more is less.
The newly and financially empowered TCI government could then go to court, because the government would have money, to sue the Provo Stevedoring and hospital scam and expose these scams, which are causing higher prices and remove them.
Let us also implement price controls and monitoring to make sure that we see real price reductions and not scams. Again, TCI could take control of its ship and sue to remove the hospital scam. With more monies coming in, the removal the British grip on the constitution, removal of debt, removal of the CFO, ministers could be ministers again and we get our country back.
Tax reform is the only way to go.