When the autopsy comes to be performed on the body of the current APM administration, the ultimate cause of death will be disputed. The favoured view among local forensic experts will be that it was the betrayal of the party’s promise to the people that, if they were elected, they would reject the previous administration’s commitment in principle to enacting a Goods and Services Tax (GST). There is much merit there.
A minority view will be that it was the Premier’s failure to choose the alternative, to reduce the cost of government, that led to its decease. There is a lot of merit in that view. It reflects widespread demand for cost cutting.
But what it misses is that any administration attempting to slim down government would incur the wrath of a plump and entitled public service to such an extent that they would be blocked at every turn. A slimmed-down, enraged public service could and would bring down any Anguillian government.
In practical terms, the proximate cause of death is likely to be that government could not make the quorum requirement of nine members to be present in the Assembly (two-thirds of thirteen). One minister has resigned and gone over to the opposition benches in the Assembly. Government now has eight seats in the Assembly (six elected plus two ex officio) compared with the opposition’s five seats. When time on the 2022 budget runs out early in 2023, if the opposition boycotts the Assembly, and if the ruling party cannot muster nine members present, the Governor will be obliged to dismiss the government and call general elections. That is instant death.
The fiscal issue behind the introduction of GST was the need to fill a gap of some EC$22 million between tax receipts and recurrent expenditure. Our government’s borrowing to pay salaries grows greater year after year. We have been lucky to have benefitted from gifts from the British taxpayer to the extent of hundreds of millions of dollars. To solve the budgetary dilemma, the choice the Foreign Commonwealth and Development Office (FCDO) gave us was stark. Either you raise that sum in additional taxes or cut that amount of fat from the cost of government.
The crucial moment came the day after winning the general elections on 29 June 2020. It seems the Governor must have explained to the new Premier that salaries were due to be paid the following day for the month, and there was no money in the Treasury. The Premier must have been in a quandary. However, the Governor would have explained, there was a solution. Endorse the previous administration’s promise repeatedly made to the FCDO and all your worries are over: Agree to pass the AUF’s GST without delay and implement it, and the FCDO would make a gift of another EC$100 million to pay public service salaries for nearly a year. By the end of the first year after GST you should be able to raise enough revenue to continue paying your bloated public service salaries. At $22 million a year, that injection of money would be two-thirds of the monthly public service salary bill of $5 million for ten months. It was tempting.
For the unaware onlooker, it is important to explain that the new administration had won over the voters and succeeded in the 2020 general elections mainly by promising that, if they were elected to office, they would get rid of the AUF’s GST on day one. To accept the Governor’s suggestion would therefore be to betray the main plank of the legislative platform on which the successful party had campaigned. On the other hand, to refuse the Governor’s suggestion would be to leave the public service unpaid at the end of the month, that is in one day’s time.
The public service, consisting of over 2,000 persons, if you include contract and non-establishment workers, constitute the largest group of the approximately 6,000-person work force in Anguilla. They are a powerful body, with which no government wants to tangle. The public service is completely insulated from the political class. It is illegal for any politician to discipline any member of the public service.
Among Anguillians, the public service is almost universally despised. This dislike does not extend to those few public servants who provide a real public service: nurses, doctors, teachers, social workers, police and fire service, prison officers, etc. Many of the others provide little or no real service. They sit smugly in their airconditioned offices, enjoying their perks.
The public administration department justifies its existence by recruiting every week more and more useless secretaries and clerks. There are on average, I estimate, five of them doing the job of one. Ministers, Permanent Secretaries, and other important officials vie among themselves as to who can get their most unemployable cousin appointed to a plush public service job.
During the period 2020-2021, the ports were closed. Tourists were barred. The entire island was in Covid-19 lockdown. People were forbidden under penalty of imprisonment to leave their homes. Passenger traffic was closed for some eighteen months. Even after we reopened, permission to enter the island was required for another year.
As businesses collapsed island-wide, many hundreds of private sector employees were let go without pay or even the promise of reemployment once the lockdown was over. The Social Service Fund was raided to pay unemployment benefits. Meanwhile, the public service continued to receive their full salaries and allowances. There was no need to provide most public services since the public could not access government offices. Public anger was exploding.
It was at this critical moment that the new administration came to office. When the Governor gave the new Premier the choice, either accept the AUF-agreed GST deal or cut expenses, the Premier might have remembered and acted on his promise to the people who elected him.
He could have refused to sign the offered MOU and gone back to consult the public. He could have told the Governor to send home some or all the public service while he put the two options to the public. That was the type of change from the way the previous administration handled decision-making that the public were expecting.
He could have explained to the people that after the double whammy of Hurricane Irma, which destroyed the island’s infrastructure in 2017, and the Covid-19 eighteen-month lockdown of the island’s economy during 2020-2021, the previous administration had no choice but to accept imposing the demanded increased taxation in exchange for UK aid to rebuild the island.
He could have better explained that the previous administration agreed to impose GST only after every expert they consulted recommended it as the best option for the island’s sustainability. He could have explained that the best option was to accept the cards he had been dealt so that he could pay the public service. We desperately needed the offered $100 million.
Or, he could have put the other option, which was to slash the widely believed to be bloated public service. If it seemed the majority view was that he should not accept the offered money, he would have been free to demand a savage cost-cutting exercise. This option was and is popular, and if the Premier accepted it, he would have basked in the popular gaze. He would have been praised for listening to the people.
Anguilla’s public service would not tamely accept mass lay-offs, cancellation of travel and allowances, garaging of the fleet of vehicles, switching off government offices’ lights at night, and disconnection of all office air conditioners. They would retaliate.
In the general elections that would have followed the inevitable public service-led fall of the government, his party would likely have been re-elected with an increased majority. The opposition would have had no platform to stand on. He would have shown himself to be true to his principles, and to have performed the one act that his followers wanted most of all: to be rid of the burden of a perceived bloated public service which was causing them to pay, and pay, and pay.
Instead of taking his dilemma to the people, he concealed it. He took the resolute view that he had been elected to govern. He made finding the solution to the crisis his burden alone. In hindsight, this was counterproductive. This was his mistake. For months he said not a word. When the realisation sunk in that he had, without any explanation to the people, without any attempt to sell his decision to his many followers, silently betrayed his election promise to them, all his political capital instantly drained away. He should have realised it would be political suicide for him to quietly drop his election promise and agree to go along with the AUF-agreed GST. His self-confidence would be wilfully misconstrued by his enemies as a lack of interest in the views of the public. He would be described by some of the more malicious of them as having no care for the welfare of the people. No later amount of fiddling with the AUF’s GST details (for example, increasing the number of exceptions) would succeed in protecting him from the charge of betraying his supporters.
I forecast that imposing GST on uninformed and uncooperative Anguillian consumers of goods and services will not result in any great increase in revenue. Given the history, culture, and character of Anguillians, the GST will be widely evaded. So many of us will avoid collecting or paying the new tax that its effect on revenue will be minimal. Bills that were previously paid in cheques that can be easily traced will now be paid in cash. Bills that were previously paid in cash will now be paid in barter of goods and services. Other than in the bigger supermarkets, few cash sales will be receipted or recorded. It will be normal for businesses to keep two sets of accounts. Few will declare their true income to the Statistics Office or to the Inland Revenue Department.
But these are criminal offences, you will say. You should know that never in the history of Anguilla has a single tax dodger been prosecuted. There is no member of the Inland Revenue Department experienced in enforcing tax offences. There is not a single police officer or other investigator who has ever entered a business-place to check on its accounts. There is not one government lawyer who has prosecuted a tax offender. Everyone in Anguilla is related. Enforcement will be a joke.
Government has not been able to collect the millions of dollars of Accommodation Tax owed. Property Tax is several decades old. The Chief Auditor tells us that no more than 40% of it is collected. If we do not collect the present taxes, why should anyone expect that we are going to enforce collection of a new one now?
