Fellow Anguillians, Tuesday 23rd March 2021 marked another important moment in Anguilla’s history. It was the day on which a Petition from the Concerned Citizens of Anguilla which objected to the first reading of the Bill for Goods and Services Tax Act, 2021 (“GST”) was presented to and read in the Anguilla House of Assembly (“HOA”). The Petition rightfully expressed the position of many persons across Anguilla as to the prospect of further taxation on the people of Anguilla during a pandemic. However, in spite of the Petition being presented to the House, the Government of Anguilla moved forward with the first reading of the GST on that day.
For the record, the Opposition members in the HOA and the members of the Anguilla United Front as a whole hold the following views:
(1) As our country has evolved over the years, tax reform – where we move towards a more broad based tax system – has become necessary. It is for this reason that the former Anguilla United Front government continued the work that had already started and moved ahead with the first phase of the GST in 2019. I use the words “continuing the work” because in ExCo Minute 11/731 at an Executive Council meeting on 31st October 2011, Executive Council agreed to the Goods and Services/Value Added Tax as part of new tax measures in 2012. Executive Council also required the Tax Reform Working Group to take the implementation process forward “with a completion date not to exceed December 31st 2014”.
Persons present at that Executive Council meeting on 31st October 2011 included the then Chief Minister and Minister of Finance the Hon. Hubert Hughes, two of the other then Ministers of Government (Hon. Edison Baird and Hon. Walcott Richardson), Hon. Jerome Roberts (who was at the time Adviser to the Chief Minister), and Hon. Haydn Hughes, then the Parliamentary Secretary, today the Minister of Infrastructure.
(2) Additionally, in the 2014 Estimates of Recurrent Revenue, Expenditure and Capital (known to us as “the Budget Address”), the then Minister of Finance the Hon. Hubert Hughes at page 5 of his Address, explained that capital expenditure of EC$1.20 million in 2013 was spent on “Tax Reform” and it included preparatory work towards the implementation of a Value Added Tax. This meant that his Government had spent monies on making preparations for a Value Added Tax to be put in place. It is clear from various documents that a Goods and Services/Value Added Tax was considered and work on it was ongoing long before it was partially implemented in 2019 by the Anguilla United Front Government.
While we do not seek to diminish the progressive steps that were made between 2015 and 2019, it is important that the people of Anguilla are not misled into believing that discussions and steps toward the implementation of the GST were only between 2015 and 2020.
(3) We are, however, firmly of the view that the next phase of the GST should not be implemented at this point in time. We are in the midst of a global pandemic which has resulted in massive loss of jobs and a high rate of unemployment in Anguilla. For the past year Anguilla (as well the rest of the world) has been in protection mode, seeking to keep our people safe and minimize the damaging effects of covid-19. Anguilla is shortly to enter the recovery phase where, over the next few months, the country will slowly re-open for business and hopefully provide a much needed boost to our economy.
At this particular time, with so many persons unemployed and unable to make ends meet; with persons receiving a monthly monetary contribution (EC$1,000.00) from the Social Security fund which is just about to end; with the country still reeling from the devastating effects of covid-19, this is not the time to move forward on new and additional taxes, and certainly not the implementation of the next phase of the GST.
(4) It is for this reason that we have recorded and will continue to record our objections to the passage of the increase in health fees at the hospital, the increase in port fees, the increase in water rates, and the passage of the Petroleum Levy Act 2021 which has led to the increase in fuel charges.
(5) What is needed instead is substantive and honest negotiations with the UK Government regarding the inability of the people of Anguilla to bear any increase in taxation at this time (in the middle of a worldwide pandemic). Instead, it is the right time to negotiate extensions of any deadlines that would have been agreed to before covid-19 as these deadlines could not have anticipated either the presence or the impact of this deadly pandemic.
(6) The Government of Anguilla should also not be talking about removing opportunities for scholarships, training costs and new education initiatives. In fact, the Government of Anguilla’s focus should be on training and retooling our people and encouraging them to take advantage of educational opportunities while the country is in its current state so that our people are stronger and more qualified when we fully re-open our borders.
(7) In fact, as opposed to imposing taxes, Government of Anguilla’s focus should be on identifying measures to stimulate the economy.
Over the past few weeks, I have listened to a number of the members of Government speak at press conferences, on talk shows and other media outlets. I am saddened by the misrepresentations that are being used to mislead the public into believing that the implementation of the Goods and Services Tax is as a result of the banking resolution. Nothing could be further from the truth!
As Leader of the Opposition in the HOA it is my obligation to set the record straight on some matters regarding the banking resolution. Long before the banking resolution in 2016, there was the global financial crisis in 2008 which severely stressed the banking sector. We can all remember that our tourism industry suffered and economic activity slowed. In August 2013, the then Chief Minister and Minister of Finance, the Hon Hubert Hughes agreed for the Eastern Caribbean Central Bank to come into Anguilla and, as a result, our two indigenous banks, the National Bank of Anguilla (“NBA”) and the Caribbean Commercial Bank (“CCB”), were placed under conservatorship. Again, this was in 2013. The purpose of the conservatorship was to stabilize and restructure the indigenous banks.
In January 2015, Hon. Hubert Hughes requested a forensic audit of the NBA and CCB banks. Grant Thornton (BVI), a tax and advisory firm, was contracted to undertake the work.
The NBA and CCB remained under conservatorship through the April 2015 general elections when there was a change of government from the Anguilla United Movement (“the AUM”) to the Anguilla United Front (“AUF”) under the leadership of the Hon. Victor Banks, Chief Minister and Minister of Finance. One would therefore expect that the two banks could not have remained under conservatorship forever, and therefore any new Government would have had to eventually resolve this situation.
In November 2015 the then Chief Minister, Hon Mr. Victor Banks, released the key findings of the Grant Thornton report. The report concluded that the current balance sheet deficiency at NBA and CCB was due in part to the amount of non-performing loans – loans that were made by the banks but were not paid back. This news article is dated November 9th 2015 and can be found in The Anguillian newspaper online at www.theanguillian.com.
But I want to make this point – the Anguilla United Front government between 2015 and 2020 inherited the banking situation and our two indigenous banks in conservatorship. Instead of constantly blaming the AUM government for what we inherited, we set out to fix it. We chose a resolution that would guarantee 100% of depositors’ money in the two local banks. The cost of the resolution at that time was about EC$325 Million.
I have heard the criticisms of the banking resolution but those persons may not have realized that of the EC$325 Million, about EC$214 Million of the cost of banking resolution was to protect the Social Security funds. These are the very same funds that today are being used to assist Anguillians and residents since about March 2020, almost 1 year ago. We would not have had the Social Security fund today had the AUF Government not taken the decision to protect it.
The balance of the debt was to protect the local depositors – every one of us – who put our life’s savings into the NBA and CCB for safe keeping. To do otherwise, to allow our banks to fail, would have created social chaos. The economy would have been at greater risk of a much more severe collapse if the Government of Anguilla did not step in to save our indigenous banks.
It is anticipated that the sale of shares in the National Commercial Bank of Anguilla will be used to, at least in part, off-set the debt incurred for the banking resolution, thereby putting Anguilla and our economy on a stronger footing.
I have heard elected members of this current Government try to blame the implementation of the second phase of the GST on the Banking Resolution. It should now be clear that GST had been discussed and in fact made its way to Executive Council from as far back as October 2011 under the AUM Administration, two (2) years before the ECCB put our banks under conservatorship and five (5) years before the first phase of the GST was implemented in 2019.
Fellow Anguillians, my statement may have been a little long, but I need to set the record straight on the mischievous and misguided statements being made about GST and the banking resolution, both of which are current issues for us here in Anguilla. Our situation is critical and we need the Government of Anguilla to stop playing politics, stop playing the blame game, stop looking in the rear view mirror and instead move forward and work for the benefit of the people. We all know that every government inherits what was left by the government before. But it is what the government of the day does with its tools and resources that is important, if Anguilla is to move forward successfully.
God Bless us All and God Bless Anguilla.
Thursday 25th March 2021
