At a press conference on 13th June, the Ag Premier addressed collaborative proposals to repeal GST from the Concerned Citizens and ClienTell Consulting, LLC, previously shared on social media and in this publication. Continued discussion was welcomed by those proposing alternatives, who offer further clarification to points raised in the Ministry of Finance “note” read at the event.
Alternatives to GST: Spending Cuts
The proposal to cut the $226 million budget by 10%, or $22 million, without cutting salaries or jobs was acknowledged, while stating that excluding emoluments, retiring benefits and interest payments would leave $109 million. Thus, asserting $22 million would be a 20% cut, causing “severe retrenchment in public services… [with] little room for such cuts.” The “note” further contended that “any tax” was proposed, resulting in a “quantum increase in tax” to close the gap.
Clarification: Whether GOA or the People “have room for cuts” is a philosophical matter of shared sacrifice. However, only the proposed 10% cut was acknowledged; whereby, the second and third proposed GST alternatives included 5% and 3% spending reductions. Given $109 million of non-debt or emolument spending, these reductions would amount to 10.4% or 6% of the remaining budget, respectively. Sharing either sacrifice would nonetheless be less excruciating than the 13% GST impact on the People, who have already suffered greatly from inflation and numerous tax and fee increases before GST.
Notably, while “quantum” adjustments across existing taxes would avoid the suffocating oppression of GST, only the Levy was suggested in the proposed alternatives.
General Clarifications: The “note” suggested a “misunderstanding” between consumption and income tax: Clearly, GST is a consumption tax. As such, anyone living from paycheck to paycheck would bear the full impact of GST in lost buying power, while those making more, and not always consuming their full pay, would experience lower effective rates of such taxes. ISL adjustments were suggested, because those who earn more would pay more, while not affecting those earning less than $2,000/month. As a separate budget item, ISL remains transparent to the People as a corrective measure. While 5-6% lost purchasing power could affect those paying Levy, that would be less harsh than 13% GST impact.
The “note” also reflected confusion about GST on rent. Examples of persons unable to pay rent, loans, electricity, food or medical bills were made with respect to lost purchasing power due to the burden of GST. There was no direct or intended suggestion of applying GST to rent, per se.
Balanced Budget Legislation
The “note” also declared that a balanced budget legislative framework would not solve a budget deficit; that it is not a revenue measure; but rather it enshrines fiscal rules requiring that revenue matches or exceeds expenditures.
Clarification: Indeed, balanced budget legislation is not itself a tax revenue measure. However, politicians may need such laws to achieve sustainable budgets. That was pointed out in benchmarking legislation from Manitoba presented to the House of Assembly Select Committee, e.g., “we would break the law if we add such and such an expense while we are deep in debt.” This solves a political problem for the legislative branch otherwise compelled to impose new and higher revenue measures, without limits. And where in a private business or household is income or revenue not required to match or exceed expenditures? That is savings for a household and an emergency fund or surplus for a government. What is “incorrect” about that concept?
Another assertion was made in the “note” that a legislative framework does not automatically ensure that revenue exceeds expenditure, and that revenue measures, such as increases in existing taxes or implementation of new ones, are required. It is remarkable that only revenue measures such as increased or new taxes are considered to close a revenue gap. Really? Since when does a gradual reduction or spending cap only apply to the private sector, but never to those who demand ever more from the same?
Further, GST was cited as a policy-based loan requirement. In this instance, a legislative commitment to achieve a sustainable budget through enshrining a legal framework to do so should logically replace GST, which is likewise no more than a legislative commitment to fill a budget gap with a tax.
Budget Specifics
Public Assistance: The “note” reflected confusion regarding whether Public Assistance had been cut “to fund emoluments, including vacations, travel and pensions,” etc. with regard to the 2021 Public Assistance budget of $11.23 million having $7 million removed from that line item in 2022.
Clarification: With agreement on the removal of some $6-7 million from Public Assistance, the total recurrent budget remained within $2 million, overall. Whether the funds went into emoluments, supplies and materials, travel, consultants, or whatever, was not relevant: the point was that adding 6% to the Levy and saving $6-7 million could be combined to justify the repeal of GST and fill the $22 million gap.
Duty, Surcharges and Public Consultations: The “note” also addressed whether or not duties and surcharges remained after a “widely consulted” IGT implementation in 2019 – that reduced some duty rates, e.g. 8% to 4% (while not mentioning IGT increased such fees by 9%).
Clarification: $3.9 million of Custom Surcharge is in the 2022 budget, so being completely absorbed is not reflected in the figures. Another $8 million on alcohol, $5 million on fuel and gas, and $34 million also remain in other Customs Duties.
As for being “widely consulted in phase one,” some 70 people were in the room when the July 2019 IGT meeting was convened. It began with the Permanent Secretary of Finance saying, “This is not a consultation. This tax will move forward.”
Press Conference: “GST is designed to improve fiscal resilience due to ‘efficiencies’ in the administration of the tax.”
At the June 13th press conference, the Comptroller presented a GST rollout progress report. He spoke for nearly 8 minutes detailing complexities of imposing GST on the People of Anguilla. These included: training IRD and Customs staff, forms, procedures, capacity building, an online system for paying, regulations, lists and tables of zero-rated and exempt supplies (requiring supermarkets to put them into their systems), advisory visits, registration, filing, payment and refunds, risk assessments, compliance and collections, audits, objections and appeals… training brokers and taxpayer “education” – as well as, compliance actions, notices to register, tax identification systems, joint exercises, displaying certificates, getting receipts (to be saved for seven years), and detailing export, import, manufacturing, and GST – but not necessarily duty or surcharge – exemptions in the regulations.
In all, GST legislation spans 89 pages with 26 pages of countless regulations, and infinitely more of them to come, as reflected in Sections 100 and 103; whereby, new regulations and changes may be made at any time without public consultation.
Given this litany of “deliverables,” does any reasonable person believe “GST is designed to improve fiscal resilience due to ‘efficiencies’ in the administration of the tax”? Not one of our existing taxes requires any of this.
Only by adopting one of the proposed alternative measures, by repealing GST, and by balancing our budget, can we all realize our shared vision for the future – with Anguilla, proud, strong, and free!
This discussion seeks to further clarify and express appreciation for the dialogue offered in the GOA Press Conference on June 13, 2022. In collaboration with the Concerned Citizens of Anguilla and based on feedback from businesses and citizens from across the community, the discussion also reflects updated and expanded recommendations previously presented in the Anguilla House of Assembly on July 5, 2021, by Ms. Melinda Goddard, Principal of ClienTell Consulting, in her presentation to the Select Committee on (GST) Goods and Service Tax Public Hearing.
