It was budget day in the Anguilla House of Assembly on Wednesday, December 9. It was one of the earliest presentations of the Estimates of Revenue and Expenditure, in recent times, to finance the island’s public services for the year ending December 31, 2016. The budget address was delivered by Chief Minister and Minister of Finance, Mr. Victor Banks – his first presentation since the election of his Anguilla United Front Government on April 22, 2015. The address had as its theme: We have to define the times, not allow the times to define us!
The 2016 budget, which provides for a total of EC$225,335,227, comes
with the imposition of eleven new taxes and sizeable increases in various existing taxes. The largest increase of fees represents Interest Payments, increased from $9.3 million to $15.6 million. The Chief Minister and Minister of Finance pointed out that “this spike in interest payments is essentially to deal with resolving our banking crisis.”
Two particular excerpts from Mr. Banks’ budget address are basically what the people of Anguilla were anxious to hear about. The first excerpt is from page 6 of the 19-page address and is as follows:
“3. RECURRENT EXPENDITURE 2016
Mr Speaker, the 2016 Estimates of Revenue and Expenditure provide for total expenditure (including principal repayments) of two hundred and twenty five million three hundred and thirty five thousand two hundred and twenty seven dollars ($225,335,227).
Mr Speaker, therefore, the Recurrent Expenditure without amortisation for the fiscal year 2016 is estimated at EC$202.3 million which is 5.3% increase over EC$192.1 million for fiscal year 2015. There are varying degrees of increases across the various budget economic classifications for 2016 Budget when compared to 2015. Salaries and Wages will increase from EC$86.8 million to EC$87.2 million. This minor 0.4% increase is mainly attributed to the filling and regularizing of positions in critical areas such as Education, Social Services and others. Retiring Benefits moved from EC$10.0 million to EC$10.3 million resulting in a 3.1% to facilitate the additional retirees in 2016. Interest Payments increased from EC$9.3 million to EC$15.6 million which is the largest increase of 67.3%. This spike in interest payments is essentially to deal with resolving our banking crisis. Goods and Services increased from EC$43.3 to EC$45.2 million. The 4.4% increase is basically attributed to training, maintenance services, utilities, insurance, and supplies and materials. Lastly, Current Transfers which includes payments to our Statutory Bodies increased from EC$42.6 million to EC$44.0 million. This 3.2% increase is primarily due to public assistance, health services, community and youth initiatives and sports.
Mister Speaker we will now take some time to outline in some detail the expenditure allotment by ministry and departments as well as the on-going and new initiatives of our ministries for the 2016 year.
3.1 H E The Governor’s Ministry and Departments
The 2016 recurrent estimate for the Governor’s Office & Departments is EC$28.842 million. Mister Speaker this is a very minuscule decrease over the 2015 approved estimate of EC$28.849 million.”
The second excerpt is from page 18 and reads as follows:
4. RECURRENT REVENUE 2016
“Mr. Speaker, the revenue estimate for 2016 is EC$219.87 million, which represents a 12.67% increase over the 2015 estimate of EC$195.145 million. This projection is based on a combination of new tax measures, a more robust approach to collections, and modest economic growth expectations of 3% to 5%.
“The new tax measures for 2016 are as follows:
1. Increase in Anglec Licence by 150% – EC$750k
2. Implement Anglec Gross Rev Tax of 0.65%
on – EC$520k
3. Implement Petroleum Licence (bulk importers) – EC$1.5m
4. Implement Petroleum Gross Rev Tax of 0.85%– EC$760k
5. Increase in Land Registry Fees by 100%– EC$568k
6. Increase in Driver Licence by 25%– EC$2.4m
7. Increase in Vehicle Licences by 25% – EC$8.8m
8. Increase Cruise Permits by 50% – EC$1.2m
9. Increase Marketing Levy from $1 to $3 per night per person – EC$3.5m
10. Implementation of a Training Levy at 10%
of the work permit fee – EC$486k
11. Increase Communication Levy from 10% to 15% – EC$5.09 m
“In addition to the tax measures mentioned above, the yield from the property tax is expected to improve significantly based on the updated property tax register.
“Mr. Speaker, the following presents a summary of the revenue composition in 2016:
“30.7% of total recurrent revenue is projected to come from Duties and is estimated to total EC$67.57 million. Another significant contributor to revenue is taxes on domestic goods and services, accounting for some 24.58% of revenue or EC$54.04 million. Of that total, Accommodation Tax accounts for EC$21.3 million, and Stamp Duty, EC$12 million. The Interim Stabilization Levy will remain in its current form and is expected to generate some EC$13.9 million. Tax on property is estimated at EC$10.07 million, which represents a modest 4.58% of recurrent revenues. Taxes on International Trade and Transactions continue to be a major source of revenue and in 2016, anticipated collections are EC$20.4 million or 9.3% of recurrent revenues.
“Non-tax revenues account for some EC$33.22 million or 15.11% of revenue of which fees, fines, and permits account for EC$23.67 million.
“Mr Speaker again, there has been much speculation in recent weeks about the measures which will form the 2016 Revenue Budget. The speculation can now come to an end. With all the challenges facing Anguilla (the need to finance the resolution of NBA and CCB, the need to finance our recurrent expenditure needs in Health, Education and other areas of Social Development, the need to finance investment in our social and economic infrastructure (schools, health and sports facilities, ports and roads) we have a choice to make. We either define the times or we allow the times to define us. I would suggest that the former is the better choice to make. It involves sacrifices to be made, but in the long-run we as a People will be better off for it. Indeed real leadership often involves taking decisions which while they may not be popular they are for the greater good.”
Capital Expenditure is another area of public interest. That section of the budget address is as follows:
5. CAPITAL BUDGET 2016
“Mr Speaker, the proposed Capital Budget for 2016 is EC$26,547,800 and the anticipated sources of funds include the remainder of the UKG grant funds that will finance the Telecommunication Tower Replacement and the Fire Station and Air Traffic Control Tower Development; and, the remaining Loan and Grant from the Caribbean Development Bank for the on-going development of the Anguilla Community College. The balance of the Caribbean Catastrophic Risk Insurance Facility (CCRIF) funds will continue to finance recovery and mitigation projects such as the operationalization of the National Emergency Operations Centre and ensuring that existing backup power and communications systems are reliable and in usable condition.
“Provision has been made to support the most crucial equipment needs of the Health Authority of Anguilla. Every effort is made to supplement this with requests to various corporate agencies for grant support. Mr Speaker, having heard the most recent statistics on the prevalence of CNCDs in our island, it is quite alarming and all efforts must be made to support our people’s own individual efforts to live and promote healthy lifestyles in a bid to arrest this trend. The Pan American Health Organisation (PAHO) have committed to providing counterpart financing to support the important implementation of a STEPS survey that measures the main risk factors that cause chronic non communicable diseases (CNCDs). This will enable development of better targeted programmes and interventions to address CNCDs.
“The remaining projects in the 2016 Capital Budget are a mix that focuses on development and replacement of government’s assets, fisheries development, efficient energy practices, further developing our tourism product, and an evidenced based vision and plan for our country. Two projects worthy of specific mention are the continued development of the Valley Primary School and the Albena Lake Hodge Comprehensive School Masterplanning and development. Advancement of the Education sector continues to be given a high priority as seen by the EDF 11 Programme scheduled to support the implementation of Anguilla’s Education Development Plan, 2015 to 2020. Approximately EC$41m (14m Euro) has been allocated to Anguilla for the 11th EDF period, 2015 – 2020. It is anticipated that these funds will finance the remaining projects in the 2016 Capital Budget.
“Mr Speaker, fiscal prudence continues in the face of on-going financial challenges which often mean a combination of restrictions on spending and phased project implementation. However, this approach must be mirrored with the reality that there are vital areas of development that must be addressed, some projects that have to be implemented. A case in point is the rehabilitation of the Road Bay Jetty, which has become one of the most crucial projects in our Capital Budget. Mr Speaker, capital investment is imperative, the need to economise cannot continue to be at the expense of our health, our education, our safety and our progress as a nation.
“Mr Speaker, as always, we extend our gratitude to all our development partners and look forward to a continued dynamic and fruitful working relationship.”
6. CAPITAL REVENUE 2016
“Capital Revenue for 2016 is estimated at EC$32.2m and comprises the following: Approximately EC$12m of EDF funds are anticipated for disbursement in 2016 and these funds will finance projects in the 2016 Capital to the amount of EC$8.4m. A grant request to the UK of EC$4m to finance the rehabilitation of Road Bay Jetty is pending. The sale of ANGLEC shares is expected to net EC$16.2m. The intention is to use these funds to make an initial contribution to a Sinking Fund which will be created to meet the repay the debt that will be incurred to resolve the two troubled banks.”
“Earlier in his budget address presentation, Mr. Banks said: “I employ this occasion to once again express our profound thanks and appreciation to the people of Anguilla for the overwhelming confidence they have reposed in us to lead our country forward out of the wilderness of prolonged recession, severe unemployment and loss of income, economic and financial instability and fiscal uncertainty. We do so with great humility in the face of the strong mandate the people have given us. This is an awesome responsibility placed on our shoulders. With this is mind, and considering others, we find it fitting that the theme of this year’s budget address be: We have to define the times, not allow the times to define us!”.
He continued: “Mr. Speaker, this year has been a particularly trying one for all of us. It is our main objective as a Government to bring our island back on a strong path towards fiscal and economic stability. Such a path requires a focused approach because the indigenous banking sector has been and still is responsible for seventy-five percent or more of domestic banking industry and banking activity. Indeed this sector is the foundation of the people of Anguilla’s growth and participation in our national development. If this sector is struggling it is obvious that the rest of the economy will likewise be adversely impacted. We recognized this very early and understood the need to take principled and well researched and informed action, after weighing various alternatives.
“My colleagues entrusted me as Minister of Finance to lead the way, namely, to define the scope of the issue; research, examine, and review the options; and propose a viable and affordable way forward that ensures that customers deposits are guaranteed, the sector retains much of its indigenous character, an improved and effective regulatory framework is put in place; and negative impacts on staff are minimized.
“Mr. Speaker, I am happy to report that we are now in a position to realize all of the above in keeping with page 12 Section 3.4.1 of our AUF Party manifesto dealing with Recovery and Growth in Commercial Banking and Finance. And I quote our vision 2020 statement in this section: “we envisage the indigenous banks will be recovered, strengthened and growing, meeting the needs of the people of Anguilla, and with the international banks facilitating a new period of robust economic growth.” We took the time to define these times and the way forward for a prosperous Anguilla in our Manifesto. We aim to fulfill the goals and objectives we have set out therein over the next five years.
“But all of the above will not be sustainable unless the underlying economy is robust and capable of fulfilling the requirements for growth and success, namely increased jobs, business opportunities, investment and training. These have been the core elements of our mantra upon seeking the support of the people of Anguilla in the last election. We do not intend to depart from these core imperatives.”
In concluding his budget address, Chief Minister Banks had this to say: “Mr. Speaker,
“The Staff in the Ministry of Finance as well as the Permanent Secretaries and Heads of Departments in the various Ministries work extremely hard during the preparation of the Annual Budgetary Estimates. Let me now take this opportunity to commend them for the brilliant job they are doing with us as with past administrations. And let me state openly and candidly that we will not “throw you under the bus” simply to avoid the blame for taking decisive action.
“Yours is an exercise that begins in late July and August and is continually revised, updated and tweaked up until this very important day. The term “estimates” is definitive. It is not an exact science to begin with and moreover the process is further subjected to the vagaries of the external environment. This is especially so in small island states with open and vulnerable economies like Anguilla. We must therefore be continually redefining ourselves and adjusting our strategies to manage the conditions and the circumstances that we face.
“These conditions and circumstances are seldom ever of our making — whether it is the global recession; the rising cost of energy; climate change; terrorism; harmful tax initiatives; sea level rising or global warming. What remains constant is that nothing comes without a cost and very often we have to make sacrifices for the damage done by others. Many of the issues we are faced with today require that they be managed in an atmosphere of calm and responsibility. Any other approach will not be helpful to the cause of effective resolution.
“Over the last weeks, Mr. Speaker, many of our detractors have been telling the people of Anguilla what they don’t want and why they should protest. However, we are not hearing any reasoned solutions being put forward on how to deal with the challenges or how they will be financed. All we hear about are scare tactics and calls to civil disobedience, as if this is their approach to good governance.
“Mr. Speaker, it is clear that the last five years did not offer up a viable response to fixing the underlying economy on a sustainable basis. There can be no viable adjustment program that does not provide for some form of investment in the public and private sectors to stimulate and sustain growth, restore employment and incomes. Simply balancing the budget can be a cosmetic exercise when it comes to national development. The Government’s balance sheet may look handsome but the wider economy will not show any positive effects for an extended period of time, without a robust growth strategy in addition to a fiscal rebalancing and stabilization strategy.
“Our Government, Mr. Speaker, has pledged to fix our indigenous banking industry, maintain fiscal stability and budgetary balance and at the same time aggressively promote and pursue the revival of the economy and a return to robust and steady growth and the expansion of access to improved social services. And to do so we are prepared to take the tough decisions to make positive things happen for all the people.
“The period ahead calls for responsible leadership that looks to the longer term well-being of the economy rather than the expediency of political or soc
ial advantage. Dialogue is indeed essential in the process of democratic governance. But it must never deteriorate to the level of bullying and boisterousness. It is becoming apparent that in Anguilla today the end game is more personal than national.
“But through it all we as the AUF and now as the Government of Anguilla will continue to focus on the greater good. The people of Anguilla deserve no less and we are confident that we are the Government capable of delivering on this. Yes Mr Speaker we have to define the times and not allow the times to define us.
“Let me end by thanking all of you in the gallery who have graced us with your presence today and have politely and patiently endured this lengthy presentation. May you all be blessed with a wonderful Xmas and a bright healthy and prosperous 2016.”
The debate of the budget was set for Thursday and Friday, December 10 and 11, respectively.
