It was gratifying to read the comments on the Interim Stabilization Levy Act expressed by the Mr. Franklin B. Connor OBE, one of the highest-ranking Anguillian public servants in “The Anguillian” last week. Mr. Connor served ultimately as Director of Finance but has acted as Deputy Governor and Governor on many occasions. Mr. Connor reinforced what the leadership of the Anguilla United Front (AUF) has been saying on various media and in the House of Assembly for more than eight weeks. While there are those who may regard the AUF commentary on the subject as sheer politics, Mr. Connor has never identified himself with any particular party, even when he ran as a candidate for the Road South seat in 1999 and 2000, he ran as an Independent. And last year during the selection process for the Second Nominated Member, in the House of Assembly, the Chief Minister and his colleagues in the AUM proposed Mr. Connor as their candidate.
It is not my style to be repetitious --- but I have noticed that no matter what facts we advance about the Chief Minister’s position on this issue --- he continues to persist with the same arguments. I therefore have taken the time to demonstrate that Mr. Connor is non-partisan and is in fact embraced by the Chief Minister as someone who is qualified and perhaps even impartial, politically. I will therefore highlight a few strong positions the AUF has been advancing and quote comments from Mr. Connor on those matters as follows:-
It is not my style to be repetitious --- but I have noticed that no matter what facts we advance about the Chief Minister’s position on this issue --- he continues to persist with the same arguments. I therefore have taken the time to demonstrate that Mr. Connor is non-partisan and is in fact embraced by the Chief Minister as someone who is qualified and perhaps even impartial, politically. I will therefore highlight a few strong positions the AUF has been advancing and quote comments from Mr. Connor on those matters as follows:-
- 1. We have been saying that the British Government did not force us neither did they force the present Chief Minister to impose the Levy or any other tax measure. Mr. Connor said: “In all my years working for Anguilla in Finance, and negotiating budgets with the British, never once did the British indicate to the Government what it should do to raise revenue. This Stabilization Levy is not imposed by the British”.
- 2. We have been insisting, with the relevant supporting sections from the Anguilla Constitution, that the Levy was imposed by the Anguilla Government therefore it can also amend it or repeal it. Mr. Connor said: “There have been comments by Ministers of Government that it is not their doing and that it was done by the British Government. I think that the public should be aware that this is a false statement. The legislation is imposed by the Government of Anguilla and if they want to amend it, they can amend it; if they want to withdraw it, they can withdraw it. All the British Government is concerned about is that they don’t spend more than they earn.”
- 3. We have been saying that the low and lower middle-income earners are bearing the brunt of the burden for the tax. Mr. Connor said: “In my view, the Government is trying to finance Government services, which are for the entire population, on the backs of the poor. …. you are taxing the people at the bottom to be able to pay the people at the top tax-free salaries. That is obviously wrong. As far as I see it, you are taxing the poor to pay the rich.”
- 4. We have been saying that the assent of Secretary of State is the last part of the process of making laws and that the only time the Secretary of State would initiate the process is through the rare Order in Council. We have also refuted the Chief Minister’s claim that only the Governor and the Secretary of State can repeal the law. Mr. Connor said: “That obviously is ridiculous. The Honourable Chief Minister is a consummate politician. He has the ability to tell people what he wants them to believe. I have no doubt that he is telling the people what he wants them to believe. The truth is that the Anguilla Legislature can amend, can cancel, abolish rescind any legislation except legislation which has been written for and imposed by the British Government.”
- 5. We said that the self-employed are not properly dealt with in the legislation and that that situation can present issues of compliance and lead to their criminalization. Mr. Connor said: “It is extremely unclear in the legislation how you can calculate the tax on the self-employed and other people who have to spend money to earn money. … how do you calculate the tax on a taxi-driver or a fisherman? In the case of the fisherman on some days he has to spend just as much in fuel and other accessories, to get the fish to sell. What does he pay on his net or his gross? Similarly the taxi-driver has to buy tyres and gas to earn his fare. What does he pay on his total income? Or does he pay on the difference between what he spent to earn that money or on what he actually earned?”
Like Mr. Connor we have been calling the Levy a “bad law”. We think it is a bad law because it is unfair and inequitable. We believe that it goes beyond politics and we have been inviting the Chief Minister to join with the Parliamentary Opposition to negotiate the repeal process for the Act. And like Mr. Connor we feel that the inequity and unfairness are blatant enough to make a strong case to the Secretary of State as to why it should be repealed. Mr. Connor went even further with the statement that: “I would be surprised if people in London, like the Secretary of State, looking at it in terms of its unfairness of application to Anguilla, would not exercise his power of disallowance.”
Even though we have not expressed that thought as strongly as Mr. Connor does, we in the AUF have included such an approach to the Secretary of State as a part of our strategy for repealing the Act. In fact the letter to the Minister for the Overseas Territories has already been drafted since the Chief Minister in a letter to the Leader of the Opposition bluntly rejected our overtures to work together for the repeal of the Act. Those of you who had the chance to read Hon. Evans McNiel Rogers’ letter to the Chief Minister as printed in “The Anguillian” would be extremely disappointed in the Chief Minister’s response. Let me quote that response in its entirety: “Dear Hon. Rogers, Interim Stabilization Levy. Your letter of today’s date has just been referred to me and I have read it with interest. As you should be well aware, your letter should be addressed to His Excellency, the Governor. Sincerely, Hubert B. Hughes, Chief Minister.”
Whether out of honest ignorance or willful guile, the Chief Minister continues to act as if the Secretary of State runs the Anguilla Legislature. He continues to abdicate his responsibility as Leader of Government Business to the Secretary of State through the Governor. Can it be that the Chief Minister does not really understand his role or like Minister Baird said in “His Confessions: “he has little or no say in the running of the island”.
In this context, it was amusing that the Chief Minister gave the opening address at the Anguilla Finance (AF) Strategy Planning Conference last weekend at Paradise Cove Hotel. I say amusing, because this is an area where the Governor and the Secretary of State clearly have reserve powers --- yet the same Chief Minister who is willing to abdicate his responsibility to the Secretary of State on a matter within his purview, is posturing with brave words about how he will take more responsibility for making favourable laws for the sector. I have no doubt that the Government recognizes the need to develop more streams of revenue from its Financial Services Sector but it must first take the time to understand that it is not about “laying down the gauntlet” for another battle with the British --- it is about understanding the industry and using our advantages to our benefit. Whether we like it or not this is one sector where the umbrella of the British Flag maybe an advantage. But we must also appreciate that the British Government are our competitors. We must therefore strike the right balance to get the best out of the relationship.
I would not allow that foregoing observation, however, to undermine the positive spirit of the AF Conference. There was a feeling in the atmosphere that all segments of the industry were “working together for the common good”. And a real sense that this is the last time --- no turning back! Having been involved in the sector for almost thirty years in several capacities this would not be the first beginning I have shared --- but on this occasion I feel that everything is in place. Because of that “gut feeling” I suggested that this is the time we have been waiting for, we have the modern legislation; we have state of the art technology; we have sound regulatory systems; we have homegrown and well-honed skills to exploit the industry; we are compliant with all of the global initiatives on transparency and openness, and we have the momentum. This is an exciting situation and augurs well for the success of this initiative.
The new initiative is also important because to quote Lynwood Bell in his letter to the Editor of The Anguillian: “much new business could be generated in Anguilla. Yet it would require no more major expenditures, no more hotel rooms, no bigger airports; no more flights, no more restaurants, other physical infrastructure to exploit it.” The significance of this comment is that especially at this time when the Government needs to develop new streams of revenue the Financial Services Sector is well placed to be exploited because there is no need for expensive infrastructure to do so. To achieve this, a viable marketing strategy will need to be developed and this is precisely what is being proposed.
The discussion at the AF Strategy Conference also addressed the issue of taxation and a suggestion was made by one of the presenters that the implementation of taxes locally would benefit the image of Anguilla as an offshore investment jurisdiction. That statement only goes to show the number of different perspectives that can exist within the industry. However, the fact that our frontline competitors continue to try to find more and more creative ways to maintain a zero tax status suggests that it may be foolhardy to do otherwise and thereby lose what may appear to be an advantage to already established jurisdictions. It is in this context, that the Government should be taking account of a number of policy decisions it is making. Taxation is certainly one of these but also issues like multi-year work permits, foreign exchange restrictions, constitutional status and so on are critical to our success as a jurisdiction as well.
Towards the end of the Conference I found it important to make an intervention to include the issue of regulation and overregulation. During the entire period of my involvement in the sector as a government minister we promoted Anguilla as a well -regulated jurisdiction. We marketed ourselves as a jurisdiction that was not open to all comers but welcoming to reputable clients. While the enthusiasm of this initiative must continue we must never lose that focus --- other jurisdictions have been fortunate to avoid major scandals despite their shortcomings in this area but we cannot leave anything to chance. At the same time we should not over-regulate either and impose structures that are inimical to enhancing the success of our jurisdiction as a “sought-after” provider of “top of the heap” financial services. Again the issue of balance comes in.
In this context, I took the time to warn participants that very often some regulators adopt the approach that Financial Services Department exists to provide regulatory services. This was an area of controversy during the early days of the establishment of the Financial Services Commission. There was a serious drive to make the Commercial Registry a part of the Commission. Several debates and discussions up to the then Minister for the Overseas Territories resulted in the view of the Ministry of Finance prevailing. It is a natural tendency that persons responsible for enforcement and compliance would wish to make their job easy --- but this should not be at the expense of thwarting the growth of an industry. We should be in Financial Services to create business, drive revenues and build an economy. We must take note of and pay attention to the motives of the OECD countries, the G20 grouping, and other international agencies involved in regulation --- but we should not allow ourselves to be overrun. Again this is a delicate balance --- and there will be always something.
I have been hearing a “shoo-shoo” that once again the issue of placing the Commercial Registry in the Financial Services Commission has come up. We should not lose this positive advantage that we fought so hard to achieve. There is absolutely no good reason why this should be the case --- in fact there are several good reasons why it should not be the case. The foremost reason is that such an arrangement would be tantamount to the Registry regulating itself. Such an incestuous arrangement could never be in the interest of the sound regulatory environment we wish to promote. So as we come together to promote the common good let us not lose sight of our common interests as participants in this industry. The British government is our partner. It ensures that we remain a well-regulated jurisdiction --- the responsibility for building the industry remains with us. A number of practitioners have suggested that Anguilla would probably benefit from using the “moniker”: “British Anguilla”. The view being that being a British Overseas Territory brings considerable advantage. But at the end of the day we are the ones to decide how we advance our industry --- it does not matter whether or not it is “under a British heaven!”
By: Victor F. Banks
Even though we have not expressed that thought as strongly as Mr. Connor does, we in the AUF have included such an approach to the Secretary of State as a part of our strategy for repealing the Act. In fact the letter to the Minister for the Overseas Territories has already been drafted since the Chief Minister in a letter to the Leader of the Opposition bluntly rejected our overtures to work together for the repeal of the Act. Those of you who had the chance to read Hon. Evans McNiel Rogers’ letter to the Chief Minister as printed in “The Anguillian” would be extremely disappointed in the Chief Minister’s response. Let me quote that response in its entirety: “Dear Hon. Rogers, Interim Stabilization Levy. Your letter of today’s date has just been referred to me and I have read it with interest. As you should be well aware, your letter should be addressed to His Excellency, the Governor. Sincerely, Hubert B. Hughes, Chief Minister.”
Whether out of honest ignorance or willful guile, the Chief Minister continues to act as if the Secretary of State runs the Anguilla Legislature. He continues to abdicate his responsibility as Leader of Government Business to the Secretary of State through the Governor. Can it be that the Chief Minister does not really understand his role or like Minister Baird said in “His Confessions: “he has little or no say in the running of the island”.
In this context, it was amusing that the Chief Minister gave the opening address at the Anguilla Finance (AF) Strategy Planning Conference last weekend at Paradise Cove Hotel. I say amusing, because this is an area where the Governor and the Secretary of State clearly have reserve powers --- yet the same Chief Minister who is willing to abdicate his responsibility to the Secretary of State on a matter within his purview, is posturing with brave words about how he will take more responsibility for making favourable laws for the sector. I have no doubt that the Government recognizes the need to develop more streams of revenue from its Financial Services Sector but it must first take the time to understand that it is not about “laying down the gauntlet” for another battle with the British --- it is about understanding the industry and using our advantages to our benefit. Whether we like it or not this is one sector where the umbrella of the British Flag maybe an advantage. But we must also appreciate that the British Government are our competitors. We must therefore strike the right balance to get the best out of the relationship.
I would not allow that foregoing observation, however, to undermine the positive spirit of the AF Conference. There was a feeling in the atmosphere that all segments of the industry were “working together for the common good”. And a real sense that this is the last time --- no turning back! Having been involved in the sector for almost thirty years in several capacities this would not be the first beginning I have shared --- but on this occasion I feel that everything is in place. Because of that “gut feeling” I suggested that this is the time we have been waiting for, we have the modern legislation; we have state of the art technology; we have sound regulatory systems; we have homegrown and well-honed skills to exploit the industry; we are compliant with all of the global initiatives on transparency and openness, and we have the momentum. This is an exciting situation and augurs well for the success of this initiative.
The new initiative is also important because to quote Lynwood Bell in his letter to the Editor of The Anguillian: “much new business could be generated in Anguilla. Yet it would require no more major expenditures, no more hotel rooms, no bigger airports; no more flights, no more restaurants, other physical infrastructure to exploit it.” The significance of this comment is that especially at this time when the Government needs to develop new streams of revenue the Financial Services Sector is well placed to be exploited because there is no need for expensive infrastructure to do so. To achieve this, a viable marketing strategy will need to be developed and this is precisely what is being proposed.
The discussion at the AF Strategy Conference also addressed the issue of taxation and a suggestion was made by one of the presenters that the implementation of taxes locally would benefit the image of Anguilla as an offshore investment jurisdiction. That statement only goes to show the number of different perspectives that can exist within the industry. However, the fact that our frontline competitors continue to try to find more and more creative ways to maintain a zero tax status suggests that it may be foolhardy to do otherwise and thereby lose what may appear to be an advantage to already established jurisdictions. It is in this context, that the Government should be taking account of a number of policy decisions it is making. Taxation is certainly one of these but also issues like multi-year work permits, foreign exchange restrictions, constitutional status and so on are critical to our success as a jurisdiction as well.
Towards the end of the Conference I found it important to make an intervention to include the issue of regulation and overregulation. During the entire period of my involvement in the sector as a government minister we promoted Anguilla as a well -regulated jurisdiction. We marketed ourselves as a jurisdiction that was not open to all comers but welcoming to reputable clients. While the enthusiasm of this initiative must continue we must never lose that focus --- other jurisdictions have been fortunate to avoid major scandals despite their shortcomings in this area but we cannot leave anything to chance. At the same time we should not over-regulate either and impose structures that are inimical to enhancing the success of our jurisdiction as a “sought-after” provider of “top of the heap” financial services. Again the issue of balance comes in.
In this context, I took the time to warn participants that very often some regulators adopt the approach that Financial Services Department exists to provide regulatory services. This was an area of controversy during the early days of the establishment of the Financial Services Commission. There was a serious drive to make the Commercial Registry a part of the Commission. Several debates and discussions up to the then Minister for the Overseas Territories resulted in the view of the Ministry of Finance prevailing. It is a natural tendency that persons responsible for enforcement and compliance would wish to make their job easy --- but this should not be at the expense of thwarting the growth of an industry. We should be in Financial Services to create business, drive revenues and build an economy. We must take note of and pay attention to the motives of the OECD countries, the G20 grouping, and other international agencies involved in regulation --- but we should not allow ourselves to be overrun. Again this is a delicate balance --- and there will be always something.
I have been hearing a “shoo-shoo” that once again the issue of placing the Commercial Registry in the Financial Services Commission has come up. We should not lose this positive advantage that we fought so hard to achieve. There is absolutely no good reason why this should be the case --- in fact there are several good reasons why it should not be the case. The foremost reason is that such an arrangement would be tantamount to the Registry regulating itself. Such an incestuous arrangement could never be in the interest of the sound regulatory environment we wish to promote. So as we come together to promote the common good let us not lose sight of our common interests as participants in this industry. The British government is our partner. It ensures that we remain a well-regulated jurisdiction --- the responsibility for building the industry remains with us. A number of practitioners have suggested that Anguilla would probably benefit from using the “moniker”: “British Anguilla”. The view being that being a British Overseas Territory brings considerable advantage. But at the end of the day we are the ones to decide how we advance our industry --- it does not matter whether or not it is “under a British heaven!”
By: Victor F. Banks
Sachasses Estate
May 10, 2011
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“Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity” – MLK.