Much to the disappointment of employers and employees who complain about paying the Interim Stabilisation Levy, this from of tax, imposed by the Anguilla Government, will continue beyond this year-end and for the unforeseeable future.
Confirmation of this was given by Chief Minister and Minister of Finance, Hubert Hughes, who had repeatedly vowed that the payment of the levy would be discontinued at the end of this year (2012) and put towards a National Insurance Health Fund instead.
The Chief Minister was at the time speaking in a Radio Anguilla interview with Keithstone Greaves in the first edition of the Government Information Programme In Touch on Tuesday night, October 9.Mr. Hughes was accompanied by his two Permanent Secretaries – Dr. Aidan Harrigan who has responsibility for Finance, and Mr. Foster Rogers who is responsible for Economic Development etc.
An excerpt of the interview with the Chief Minister, relating to the Levy, is as follows:
Keithstone Greaves: “Chief Minister, the Interim Stabilisation Levy was something that was introduced and you said repeatedly in the House [of Assembly] and outside the House, and on other occasions, that this Interim Stabilisation Levy is scheduled to end on the 31st of December this year. What can you tell the nation, the people of Anguilla, about the current status of the Stabilisation Levy – and whether or not this levy, as you have said in the past, will end on the 31st of December this year?”
Chief Minister:“First of all, let me explain [that] this Government steers away completely from political consideration. The Interim Stabilisation Levy is a technical situation. It’s technical, and the technocrats are dealing with it. It was a new tax, so to speak. It was something that we did not completely understand when it was proposed to us. We tried to twist it as much as possible to benefit the people because we felt that the proposal was a payroll tax of five per cent across the board – five per cent from the employer, five per cent from the employee.
“We felt that you could not continue to tax a dead economy; you could not continue to beg people and give them more benefits. So we got together, put our heads together – the technical staff put their heads together – and advised the political directorate that we could solve the problem of health…We feel that it is a moral imperative that every Government should look after the health of the nation – health comes first then education. We therefore decided that instead of just making it a straightforward plain tax, we should introduce – what every Government has tried before and failed – a National Health Insurance Scheme. So we decided that this [the levy] will revert intoa National Health Insurance Scheme. But, as I said before, when we tried to implement a new tax scenario, we encountered certain technical difficulties which sometimes delayed the process which was the real intention. So the process is slightly delayed and we are now trying to tailor the whole situation to the National Insurance Scheme. So it will run over. It will run over in 2013 definitely because we still have to develop the administration/ the apparatus to run it and to find a better formula than what we have at the present time.
“There are certain discrepancies in the old system that must be ironed out and the technocrats are beginning to do that just now. It will run over into 2013 and by the end of 2013, I am sure that by that time, we would have got everything in place; and definitely the Government is committed to a National Health Insurance Scheme and it will happen – and we are on the way. At least a start will be made and there is no turning back.”
Keithstone Greaves: “Dr.Harrigan, you might just want to shed some light on this Interim Stabilisation Levy from a technical standpoint. You might just want to break that down for the benefit of our listeners.”
Dr. Harrigan: “What the Chief Minister has said is basically true. In terms of the context in which he started out with, the Government of Anguilla found itself, at the end 2009, in some fiscal challenges with some seventy million dollars in recurrent deficit. So we had to balance that because when you run a deficit it means you running up a debt and you can’t afford to do that from year to year. It is also correct to say that the health service has been, and continues to be, a challenge in terms of financing. Most people may not realise it but health services in Anguilla are subsidised to a great extent. The budget, as the Chief Minister said, for the health sector, is somewhere in the order of twenty to twenty-five million dollars…The context was, and continues to be, that Government should try … to find some mechanism [of balancing that expenditure] and that is how the Interim Stabilisation Levy came about.
“As the name suggests it was to provide a transition period for a more permanent financing mechanism to deal with the health situation/financing. As the Chief Minister said, there have been some challenges in terms of getting everything going…The target was to have that ready for January 2013, but that has had to be postponed – so it is looking more like 2014…Yes, the intention is to extend the Stabilisation Levy…”
Another matter covered by the In Touch programme was the outstanding debt owned in salary deductions to civil servants by both the previous and present Governments of Anguilla. The last available figure was EC$27 million.
“Public servants must sympathise with Anguilla,” the Chief Minister replied. “They must also understand that whereas this Government feels it has a moral obligation to honour commitments made by the previous United Front Government, we were not responsible for the type of…burst economy which it was warned about.” He said his Government was “stuck with a bill that the economy cannot bear. We have a moral obligation to pay civil servants. We have not denied that, despite the propaganda that we were refusing to pay them…” He stated that the Government had sought a legal opinion with respect to a cut-off date and had arrived at one, but was unable to pay the civil servants due to not being able to borrow the required money under the British Government-imposed Borrowing Guidelines. The Chief Minister indicated that the Anguilla Government would repay the civil servants when it was in a position to do so.
Permanent Secretary, Foster Rogers, answered a number of questions dealing with the island’s economic development, but which could not be reported in this edition of The Anguillian due to time constraints. Matters related to Government’s delegation which the Chief Minister led to Greenland, was also covered by the In Touch Radio Anguilla programme.
