Friday, 6 May 2011
Over the past four days there was a mixture of events that were topics for conversation around Anguilla, one was a wedding --- a new beginning and the other a funeral --- the end of era. It is ironic that a royal love story should swiftly lose its headline billing to the death of a terrorist. And while these events seemed to be diametrically opposite --- romance and crime --- they both brought joy to the hearts of many of the same audiences. I must therefore take the time to briefly speak about both of these news items in the context of Anguilla.
As an Overseas Territory with a special and longstanding relationship with the Government and People of the United Kingdom, the Royal Wedding of Prince William and Kate Middleton was an event that required our expressions of goodwill and some symbol of our presence as a people. That symbol could certainly have been the presence of our Chief Minister or his representative. Of particular significance is the fact that Prince William could conceivably be the next King of England being second in line to his father. Our Chief Minister’s lame excuse for not attending the Royal Wedding may therefore be construed as an affront to a future head of the Commonwealth that we will be always be part of --- whether we become Independent or remain an Overseas Territory.
Last week’s editorial in the Anguillian got the issue right when it stated: “there comes a time when a leader must show some statesmanship regardless of the circumstances in which he finds himself”. Our elected representatives attend such social functions not because of their personal regard for “the inviter” --- but rather in deference to the office they hold and the people they represent. So regardless of the war of words that the Chief Minister has been waging with the British Government --- he must realize that there are a number of Anguillians, including persons who supported him, who are fiercely loyal to and strongly appreciative of Her Majesty the Queen and her Government. And you may have noticed that British Officials have always exhibited the highest levels of decorum in their responses to the Chief Minister even in the face of his most vicious and unfair attacks.
I believe that the Chief Minister was probably posturing to impress his supporters and others by acting as if he is being responsible or frugal with Government finances. The fact is though, that he may have lost a great deal of good will for just a few thousand pounds sterling. Or to bring it closer home such negative publicity could neutralize any positive publicity we may have received from the airing of the “the Bachelor” show on worldwide television. And by the way, it still remains a secret how much money the Government spent on the filming of that episode on Anguilla. That also was a love story!
On the other hand, the capture and killing of Osama Bin Laden was not a love story --- it was the culmination of a huge effort to hunt down a terrorist who was “responsible for the murder of thousands of innocent men, women and children.” Like every other country involved in the travel and tourism trade, Anguilla suffered from the impact of Bin Laden’s attack on the World Trade Center when he used commercial airlines loaded with innocent travelers as manned missiles. The world came to a standstill as it tried to come to grips with the realization that the level of inhumanity in the methods employed by terrorists in the cause of a perverted justice had risen to a new high. And that travel worldwide would never be the same. It was that action by Bin Laden that led to a decline in Tourist arrivals to our region for more than a year after the 9/11 attacks.
Amidst the joy and celebration with the capture and killing of the architect of worldwide terrorist operations there is the uncertainty as to how this action will contribute to the elimination of Al Queda, the organization that he controlled and employed to execute his terror attacks around the world. Such uncertainty highlights the challenges facing small economies like Anguilla as they struggle to survive in an environment where the products and services we sell to the rest of the world are dependent on issues of safety and security. Our tourism is impacted by concerns for safe travel and the viability of our financial services sector is constrained by a global perception that our financial centers may be used as channels for the funding of terrorist organizations. And while the death of Bin Laden may have brought some closure to the many relatives and friends of the victims of his reign of terror --- we still must face the reality of the seeds of evil that he planted in his disciples around the world.
I believe that the vulnerability of our island to negative fallout from events like the wedding and the funeral requires that we live by our wits. Anguilla cannot afford to squander any opportunity to advance our standing in the eyes of the outside world from whence we derive investments and customers neither can we destroy or neglect any advantage we have to be competitive as we seek to build a viable economy for our people. It is for this reason we must continue to evaluate the decisions we make as a Government to determine how they impact key assets we have as well as formulate strategies to create an environment conducive to optimizing the return from those assets for our national development.
This is the context in which we must consider the impact of the Levy on local and foreign investment generally in Anguilla but particularly in the area of our fledgling financial services sector. I am aware that while I write, practitioners are already in the process of putting together a new “Anguilla Finance” organization with a view to marketing the industry and will be conducting a Strategy Planning Conference this weekend to look at critical issues related to its future direction. Actions taken by the Government with regards the Levy are likely to change the quality of the product we have been selling since we ventured into the area of Financial Services more than thirty years ago.
Anguilla has always promoted itself as a tax free jurisdiction and in recent years to keep pace with the changing regulatory environment we have signed a number of Tax Information Exchange Agreements (TIEA’s) which have had the effect of making us compliant with the requirements for operating in the global financial marketplace. The question will certainly be asked whether this action by the Government is the “thin end of the wedge” for the introduction of other forms of income tax? And because of the paucity of information on the Levy will Anguilla really be able to boast that it is a tax-free jurisdiction?
For many years since we began to modernize our legislation; introduce “leading edge” technology in our Commercial Registry and strengthen our regulatory system, the present Chief Minister, while in opposition, was constantly complaining that we were being obstructed by the British Government from creating a robust Financial Services sector and in doing so he has always pointed to the British Virgin Islands, the Cayman Islands and Bermuda. That would be his standard line whenever a Bill relating to financial services was brought to House. His statements were usually general rather than specific, but they did highlight the important need for balance in regulation to avoid the possibility of regulating our industry out of business. In other words he appeared to recognize the importance of being competitive in the industry. Indeed, as the “new kid on the block” it is important that our jurisdiction stays ahead of the game.
In the present period, however, it would appear that the Chief Minister is not paying attention to the damage the Levy, his Government supported in the House of Assembly, can cause to our jurisdiction. And unlike his readiness to renegotiate MOU’s and MOA’s that are legally binding he seems reluctant to begin the process of repeal of this bad tax --- and a surprising readiness to accept the flawed opinion that only the Secretary of State can repeal a Law. We must be aware that the same islands BVI, Cayman and Bermuda have zero tax arrangements for their industries. In this context, the Chief Minister may be well advised to consider that he may be guilty of creating the same obstructions to the development of the financial services sector on Anguilla if he refuses to heed the advice of the Leader of the Opposition, the Hon. Evans McNiel Rogers and repeal the Levy. In this competitive environment for the providers of financial services we can ill-afford to allow anything to affect this important plank of our national economy.
While I remain hopeful that reason will prevail as several interest groups explain to the Chief Minister and his Government the serious consequences of some of the actions they have been taking --- I was seriously disappointed to hear the Chief Minister’s response to the Leader of the Opposition’s explanation of why he was wrong to conclude that he could not initiate the process for the repeal of the Interim Stabilization Levy Act. The Chief Minister delivered a very dull and rambling presentation in which rather than dealing with the issue --- he resorted to his usual diatribe about the Governor, the British Government and the Anguilla United Front (AUF), accusing them of willfully conspiring to oppress the people of Anguilla. And as he mumbled through a letter from the former Minister of the Overseas Territories to me on January 18th, 2010 --- I was reminded of the Eunuch of Ethiopia when asked by Phillip the Apostle if he understood what he was reading replied: “How can I except I have someone explains it to me”. He definitely did not understand that the Minister did not suggest any tax measures; the past Government did not agree to any tax measures; and the fact that the then Chief Minister did not reply to his letter is a clear indication of a serious difference of opinion on the financial situation which was clearly outlined in the Chief Minister’s letter of September 14, 2009. A letter that the Chief Minister has and I hope he will be willing to read in its entirety at his next presentation. I also noted that he interpreted the civility of the letter between the Minister and myself as being “chummy” or friendly. Again a clear indication that he does not understand that one can make strong points without being rude and/or disrespectful.
Indeed, the Chief Minister needed someone to explain that letter as well as his discussion about the budget and budget deficits. Mr. Hughes continues to perpetrate the lie that the AUF Government took deficit budgets to the House of Assembly. Let me use his tactic of repetition but in this case of the truth rather than his lies --- and repeat that since Anguilla was taken off grant-in-aid in 1983 no deficit budget that has gone to the House until the AUM’s three budgets over the last twelve months. And further his statement that there were ten years of deficit budgets since the Anguilla United Front came to Office in 2000 is either a blatant lie or a demonstration of his total ignorance of the budgetary process. The first recurrent deficit since 2002 was a deficit of 2.9 million in 2008 when the recession struck. Indeed, how could we accumulate fiscal reserves of over sixty five million if we did not have a surplus on the recurrent accounts? Obviously, Mr. Hughes needs someone to explain to him the difference between overall balance and recurrent balance. The overall balance includes long-term loans and the debt service for which, is calculated as part of the recurrent expenditure and as a consequence should not be “double counted”.
Let me make it simple for the Chief Minister to understand, even though he boasts that he has never borrowed from a bank in his life. (Quite unlike most of us!) “Chief Minister & Minister of Finance! One does not calculate ones total house loan and/or total car loan in ones expenditure for the year it was received! One writes them off over the period of the loan! Similarly, if the Government takes out a loan to do a major infrastructure project it is not included in the recurrent budget as an expense!”
And I am sick and tired of hearing the Chief Minister repeat ad nauseam that he met a deficit of $70 million when he came to office and reduced it by $21 million in two months. In fact, I have heard one of his talk show lawyers repeat the same nonsense just the other day. First of all how was it possible for the Chief Minister to reduce the deficit in two months if he never raised enough revenue in any of those months to meet his recurrent expenditures? Could he reduce his recurrent expenditure by $21 million to achieve this? Obviously not, his expenditure was already cut to the bone. But the Chief Minister either needs to understand the truth --- or tell the truth. Like the past Government he was able to finance his deficit by borrowing. Unlike the past government, however, he borrowed excessively from the Social Security Board and used the reserves the AUF had lodged in the European Development Fund. But the reality to which Mr. Hughes must admit is that we are in the midst of a recession and like the AUF if he were to leave Office tomorrow he would bequeath to the next Government the same challenges he now faces as the recession continues to hold.
What has come out of the entire behaviour of the Chief Minister as he tries to convince the electorate that the issues outlined by the Opposition are malicious and do not apply --- is that Hubert is out of touch with the reality of the situation and the dire straits in which many Anguillians find themselves. To quote the Leader of the Opposition in his welcome statement to Minister Bellingham: “unemployment is increasing; salaries and benefits are being reduced; no new jobs are being created; and the banks are exceeding their generosity with delinquent customers such that repossessions and foreclosures are both frequent and imminent.”
What about this reality does the Chief Minister not understand as he continues to believe that criticizing the Governor, the FCO and the AUF will solve our problems? It reminds me of the statement attributed to the French Queen Marie-Antoinette during the eighteen century. When told that her subjects were in dire straits and without bread she responded quite casually and insensitively: “then let them eat cake!”
Victor F. Banks
May 3, 2011
Posted by Realist Spikenice at 11:25