On Monday, as a part of the Parish Church of St Monica’s awareness and education sessions the church’s finance committee was tasked with making a presentation on the current TCI tax regime and led a discussion on the possible solutions.
This presentation was conducted by Gordon Burton, a member of the finance committee. These are held the following Monday of months that have five Sundays.
The following are the recommendations coming out of that discussion:
1. Restructure Business Licensing Fees
a. The current structure does not adequately capture the dynamic nature of the TCI economy and thus allows for loss in revenue by the mischaracterization of business type and scale. A rationalization of an adequate fee structure based on potential earnings or realized revenue within each sector and size of the business can be achieved. This should take into account likely operational cost per industry while understanding if minimal fees cannot be paid for the operation of a business, the vendor should consider an alternative.
2. Compliance/Collection of Outstanding Revenue
a. If the mechanism for the collection of tax revenue or compliance is faulty, then any new revenue generation measures will not likely yield the projected amounts. We suggest a similar system to that of St Kitts and Nevis whereby if any arm of the government is owed money from any individual or company, all government services will be put on hold until accounts are paid and up to date.
b. Additionally, efforts have to be made to collect outstanding revenue and examples might have to be set through the legal system to ensure a majority of persons and companies comply with the laws of the land.
3. Connecting the Dots/Expenditure Rationalize
a. People within a society enjoy the pleasures of infrastructural necessities such as roads, public schools, parks etc. The question remains how do we pay for them? By some form of taxation. Be it import duty, licensing fees, accommodation taxes, etc. An all-out education campaign needs to be conducted to sensitize the general public why they have to pay some form of tax, but also to state clearly and identify how their tax dollars are to be spent to better their lives.
b. Revenue collection agents have to be more accountable and made to understand that, if they do not collect the revenue that is due to the government, roads cannot be repaired, they cannot get their salaries and healthcare may not be affordable.
c. Within that overall context value added tax (VAT) should be revisited to determine its viability on our terms as a possible alternative to the wide range of taxes measures.
4. Price Gouging/Honesty
a. Clearly based on the recent history of the TCI with the several changes in tariff structures and then introduction of the customs processing fees there has been some blatant dishonesty by some vendors. Before any new tax structure is implemented a mechanism to ensure that vendors do not take advantage of their customers need to be considered. Simply put, free market economics does not work very well in the TCI.
b. This is in addition to having a significant amount of vendors opening their books to ensure appropriate levels of compliance is taking place so TCIG can maximize its revenue collection.
5. Taxing Services
a. Some services can and should be taxed. To minimize the overall impact, they can be phased in over an identified period of time.
6. Progressive Flat Rate Property Tax
a. Fees should be nominal.
b. Developed land should attract a smaller fee than undeveloped land.
c. Fee Structure to be based on zones, i.e. Grace Bay, Providenciales will attract a higher fee than Bambara, Middle Caicos.
d. Rates calculated per acre i.e. size of the land
e. If a property owner owns several pieces of property once the law comes into force they can choose which property exempted, and fees are progressively higher for each additional property that is acquired.
f. If a purchaser buys several properties at once but does not previously own any property, they can identify which property they would like to apply their one exemption.
g. Generational land is exempted until either it’s subdivided or transferred.
h. Funds generated to be ring fenced specifically for capital projects such as the development and maintenance of schools and roads throughout the TCI.
i. Funds to be primarily for the areas which they are collected.
7. School Registration Fee
a. Fees should be nominal.
b. Tiered approach to be used such that for each additional child parents pay a reduced fee.
c. Fees will partially offset the cost of wear and tear of the school compound by each individual student.
d. Funds generated to be ring fenced specifically for maintenance of school properties.
8. $10 Port of Entry Fee
a. Given that approximately one million tourists arrived in the TCI each of the last two years, this will generate approximately $10 million dollars.
b. Fee easy to collect as additional cost to airline tickets and cruise tickets, etc.