I was very happy when I heard that the Chief Minister was doing an interview on the “Nation’s Station”, Radio Anguilla because as I said in my column last week, many of us were looking forward to “a more structured report” on the London excursion. Broadcasting journalist, Keith “Stone” Greaves, did an excellent job in conducting a balanced interview that was both incisive and respectful. But alas! Many of his (Mr. Greaves’) questions still remain unanswered, as the Chief Minister seemed to “laser in” on the Governor and the Deputy Governor for most of the session. Thankfully, on this rare occasion the Anguilla United Front (AUF) and I, appear to have escaped his usual verbal pummeling. While I remain grateful for being spared, I am very concerned by the Chief Minister’s performance. He appeared to be at his “wits end” as to how to handle the issues facing Anguilla and seemed content to hang on to the same conspiracy theories, which he has been promulgating since his ascendance to Government.
I will not get into the details of the Chief Minister’s interview because I only heard it once before I wrote this piece. In the cause of accuracy and fairness in the content of my column, I prefer to hear such presentations several times. However, there are three points that emanate from specific questions posed by Mr. Greaves: 1) The Chief Minister considers the trip to London a woeful waste of taxpayer’s money. 2) The Chief Minister blames his inability to get things done entirely on the Governor. 3) The Chief Minister has no solution for moving the country forward other than the immediate removal/dismissal of the Governor. One or several of these three points were recurrent aspects of every single response that the Chief Minister made to almost every single question put to him during the interview. And his closing remarks were extremely brief and along the same “vein”.
Many consider the Chief Minister’s interview to be a clear indication of “failed leadership”. Here is an elected Leader of Government Business who after twenty-one months in office is unable to devise an effective strategy for dealing with the issues confronting his country; a leader who still blames the past Administration and the Governor for matters that are entirely within his control; a leader who still does not seem to understand the procedures of his own Executive Council; a leader who is unable to build harmonious relationships within his own Government yet preaches national unity; a leader who seems to believe that lies and half-truths is a “best practice” for maintaining political power; and a leader who believes that the removal/dismissal of one man (the Governor) is the panacea for all his country’s ills.
But I always believe that there is method to the Chief Minister’s “madness”. On every occasion over the last twenty-one months that he has been faced with a challenge he has diverted attention away from the issue by inciting civil disobedience and indecorous conduct among his supporters. With the budget exercise coming up this promises to be no exception. The Chief Minister has convinced a number of his supporters that the proposed transfers of Permanent Secretaries by the Deputy Governor and supported by the Governor, is a national calamity, which demands widespread protests and uncivil behaviour. It was evident from the threatening comments on “To the Point” last evening that a number of AUM “loudmouths” were well primed for such a show of belligerence and “fear-mongering”. It is obvious that the Chief Minister is paving the way to absolve himself from blame for any increases in taxation; cuts in salary; reduction in staff levels; and any other unpopular fiscal measures associated with the upcoming budget. He is placing the blame for all these things squarely on the Governor --- actually not even on the British Government. Because based on his interview, he opines that if this Governor is removed a new Governor will make a difference to the solving of our present challenges. And as a consequence of his skilful execution of that charade the “usual callers” to “To the Point” were almost hysterical in their calls that “the Governor must go!” --- while they planned yet “another masquerade” to Old Ta.
You can be assured that the frenzy associated with the island wide scurry to pay up the Interim Stabilization Levy (“the Levy”) by the end of the grace period last week will now dissipate, as all attention will be focused on this latest distraction orchestrated by the Chief Minister because of his recent statements and his interview. It is conceivable that very shortly the talk shows and the blogs will be inundated with comments about the Governor’s removal --- rather than how we are going to meet our budgetary requirements in a way that takes into account the overall interests of the island. And chances are that the Chief Minister will convince a considerable number of his supporters that any taxes imposed and any harsh fiscal measures adopted are because of the “wicked” Governor.
But I will not allow such distractions to deter me from bringing the conversation back to the “Levy” because the time has become ripe to reinforce the points that we (the AUF) have been making that it is a “bad tax” which must be repealed or substantially amended. It is not only the AUF that has condemned “the Levy” but several other informed citizens, including the former Financial Secretary and Permanent Secretary, Finance, Mr. Franklin Connor, OBE, who said categorically: “Any sensible administrator looking at the law, the way it is written, and the implications that it will have for relations between the people of Anguilla and the Government, would say this is not good, this is not fair.”
Let me also remind you how the Leader of the Opposition, Hon. Evans McNiel Rogers, in his letter of May 10th 2011 to Minister Henry Bellingham, represented the AUF position very clearly as follows:
. The Levy is applied only on income earned under $12,000 Eastern Caribbean Dollars or approximately 2,200 pounds sterling.
. The law will increase the hardship on businesses at a time when many are struggling merely to keep their doors open. Small businesses in particular will be badly affected.
. The Levy is also grossly unfair to the self-employed who are being taxed at 6% of their income, double the rate at which employed persons are being taxed and twice the rate at which businesses are taxed to match the tax paid by their employees.
. The principles on which the law is based are inappropriate to the purposes that the tax is intended to achieve and will cause harmful effects in the economy and the Anguillian community generally that will be felt for years to come.
. The Interim Stabilization Levy Act is a bad law that will be enforced by draconian measures in the form of high penalties and lengthy imprisonment terms.
. Employers are being required to pay 50% of the Levy on behalf of their employees.
. No proper provisions have been made to assess the self-employed.
. Persons having more than one employer cannot be fairly administered for purposes of taxation.
. The burden of proof as to an assessment is placed on the self-employed.
. There was not sufficient public consultation in the management and control of the tax measure that can result in the criminalization of taxpayers based on the extremely high and inflexible penalties.
. There are categories of taxpayers who will not be adequately monitored.
These are the points that we have been raising for several months now regarding issues relating to general aspects of the Levy. But I want to “hone in” on the penalties aspect of the Levy Act, which generated much concern over the past week. I also want to make the point very strongly that we have always contended, namely, that the penalties were excessive and if nothing else it was within the power of the elected Government to amend this section. Even though the Chief Minister has been spreading the false statement that he cannot repeal the Act he cannot similarly claim that he is unable to amend the penalties section because these are approved in Executive Council. In fact, by virtue of the grace period recently granted it demonstrates that the Government can exercise considerable discretion in the imposition of penalties.
Since penalties are designed to enforce compliance it is essential that taxpayers understand what is required to be compliant. The lack of effective public consultations caused many taxpayers to run afoul of the law genuinely unaware of what was required of them. Indeed, in addition to the nice old lady down the street selling “sugar cakes and mauby” there were Ministers of Religion who found themselves running in to file their returns having being completely misled that there were not required to do so based on a layman’s interpretation of the Act. There are persons who only became aware of the filing requirement that very day and without question the whole process encouraged dishonesty. All of this having implications for the ability of the department to institute a system of assessment that will lend itself to fairness. Until such is achieved the Levy will remain an unfair tax measure and as a consequence a bad tax. From a moral standpoint any tax measure that does not “pass the litmus test” of fairness and equity should either be substantially amended or repealed. There are situations in the present administration of the Levy, which cry out for adjustment as follows:
1. The EC$2,000 floor for the payment of the Levy should be an exemption for all taxpayers. In other words no one should be required to pay on the first EC$2,000.
2. The EC$50 per day penalty for late filing should be replaced with a penalty based on a percentage of the return as is the case with Social Security.
3. The grace period for the late filing of returns applied to persons with earnings less than $2,000 should also be extended to persons earning over $2,000 The grace period generally should be extended until the end of the year.
4. The self-employed and the employee should pay the same rate.
5. The employers should not be required to pay 50% of their employees Levy return given the fact that they are required to file returns as well. The present system is a disincentive to job creation and salary increases.
6. Clear provisions need to be in place to define and assess the self-employed.
But perhaps the most important aspect of fairness in any tax measure is that every citizen should pay his/her fair share. In the circumstances of Anguilla at present Government employees and employees of large firms pay the brunt of revenue earned from this measure while many self-employed persons are not captured by the system. And unlike Social Security that has a direct benefit for the taxpayer the Levy provides no incentive to be compliant. A tax measure that allows non-payers to escape with relative impunity is unfair to those who pay; is therefore a “bad tax”; and must be substantially amended or repealed.
The Chief Minister has consistently claimed that this is not his tax --- it is a British tax. However, over the past months he has made considerable amendments to Act without British intervention. Will the Chief Minister be forced to introduce new tax measures to meet a possible budgetary short fall? And if so will he ensure that they are fair and equitable? Will he be prepared to repeal the Levy since he is now boasting a surplus on the recurrent account? Will he blame the Governor? Or will he plan another masquerade?
I will not get into the details of the Chief Minister’s interview because I only heard it once before I wrote this piece. In the cause of accuracy and fairness in the content of my column, I prefer to hear such presentations several times. However, there are three points that emanate from specific questions posed by Mr. Greaves: 1) The Chief Minister considers the trip to London a woeful waste of taxpayer’s money. 2) The Chief Minister blames his inability to get things done entirely on the Governor. 3) The Chief Minister has no solution for moving the country forward other than the immediate removal/dismissal of the Governor. One or several of these three points were recurrent aspects of every single response that the Chief Minister made to almost every single question put to him during the interview. And his closing remarks were extremely brief and along the same “vein”.
Many consider the Chief Minister’s interview to be a clear indication of “failed leadership”. Here is an elected Leader of Government Business who after twenty-one months in office is unable to devise an effective strategy for dealing with the issues confronting his country; a leader who still blames the past Administration and the Governor for matters that are entirely within his control; a leader who still does not seem to understand the procedures of his own Executive Council; a leader who is unable to build harmonious relationships within his own Government yet preaches national unity; a leader who seems to believe that lies and half-truths is a “best practice” for maintaining political power; and a leader who believes that the removal/dismissal of one man (the Governor) is the panacea for all his country’s ills.
But I always believe that there is method to the Chief Minister’s “madness”. On every occasion over the last twenty-one months that he has been faced with a challenge he has diverted attention away from the issue by inciting civil disobedience and indecorous conduct among his supporters. With the budget exercise coming up this promises to be no exception. The Chief Minister has convinced a number of his supporters that the proposed transfers of Permanent Secretaries by the Deputy Governor and supported by the Governor, is a national calamity, which demands widespread protests and uncivil behaviour. It was evident from the threatening comments on “To the Point” last evening that a number of AUM “loudmouths” were well primed for such a show of belligerence and “fear-mongering”. It is obvious that the Chief Minister is paving the way to absolve himself from blame for any increases in taxation; cuts in salary; reduction in staff levels; and any other unpopular fiscal measures associated with the upcoming budget. He is placing the blame for all these things squarely on the Governor --- actually not even on the British Government. Because based on his interview, he opines that if this Governor is removed a new Governor will make a difference to the solving of our present challenges. And as a consequence of his skilful execution of that charade the “usual callers” to “To the Point” were almost hysterical in their calls that “the Governor must go!” --- while they planned yet “another masquerade” to Old Ta.
You can be assured that the frenzy associated with the island wide scurry to pay up the Interim Stabilization Levy (“the Levy”) by the end of the grace period last week will now dissipate, as all attention will be focused on this latest distraction orchestrated by the Chief Minister because of his recent statements and his interview. It is conceivable that very shortly the talk shows and the blogs will be inundated with comments about the Governor’s removal --- rather than how we are going to meet our budgetary requirements in a way that takes into account the overall interests of the island. And chances are that the Chief Minister will convince a considerable number of his supporters that any taxes imposed and any harsh fiscal measures adopted are because of the “wicked” Governor.
But I will not allow such distractions to deter me from bringing the conversation back to the “Levy” because the time has become ripe to reinforce the points that we (the AUF) have been making that it is a “bad tax” which must be repealed or substantially amended. It is not only the AUF that has condemned “the Levy” but several other informed citizens, including the former Financial Secretary and Permanent Secretary, Finance, Mr. Franklin Connor, OBE, who said categorically: “Any sensible administrator looking at the law, the way it is written, and the implications that it will have for relations between the people of Anguilla and the Government, would say this is not good, this is not fair.”
Let me also remind you how the Leader of the Opposition, Hon. Evans McNiel Rogers, in his letter of May 10th 2011 to Minister Henry Bellingham, represented the AUF position very clearly as follows:
. The Levy is applied only on income earned under $12,000 Eastern Caribbean Dollars or approximately 2,200 pounds sterling.
. The law will increase the hardship on businesses at a time when many are struggling merely to keep their doors open. Small businesses in particular will be badly affected.
. The Levy is also grossly unfair to the self-employed who are being taxed at 6% of their income, double the rate at which employed persons are being taxed and twice the rate at which businesses are taxed to match the tax paid by their employees.
. The principles on which the law is based are inappropriate to the purposes that the tax is intended to achieve and will cause harmful effects in the economy and the Anguillian community generally that will be felt for years to come.
. The Interim Stabilization Levy Act is a bad law that will be enforced by draconian measures in the form of high penalties and lengthy imprisonment terms.
. Employers are being required to pay 50% of the Levy on behalf of their employees.
. No proper provisions have been made to assess the self-employed.
. Persons having more than one employer cannot be fairly administered for purposes of taxation.
. The burden of proof as to an assessment is placed on the self-employed.
. There was not sufficient public consultation in the management and control of the tax measure that can result in the criminalization of taxpayers based on the extremely high and inflexible penalties.
. There are categories of taxpayers who will not be adequately monitored.
These are the points that we have been raising for several months now regarding issues relating to general aspects of the Levy. But I want to “hone in” on the penalties aspect of the Levy Act, which generated much concern over the past week. I also want to make the point very strongly that we have always contended, namely, that the penalties were excessive and if nothing else it was within the power of the elected Government to amend this section. Even though the Chief Minister has been spreading the false statement that he cannot repeal the Act he cannot similarly claim that he is unable to amend the penalties section because these are approved in Executive Council. In fact, by virtue of the grace period recently granted it demonstrates that the Government can exercise considerable discretion in the imposition of penalties.
Since penalties are designed to enforce compliance it is essential that taxpayers understand what is required to be compliant. The lack of effective public consultations caused many taxpayers to run afoul of the law genuinely unaware of what was required of them. Indeed, in addition to the nice old lady down the street selling “sugar cakes and mauby” there were Ministers of Religion who found themselves running in to file their returns having being completely misled that there were not required to do so based on a layman’s interpretation of the Act. There are persons who only became aware of the filing requirement that very day and without question the whole process encouraged dishonesty. All of this having implications for the ability of the department to institute a system of assessment that will lend itself to fairness. Until such is achieved the Levy will remain an unfair tax measure and as a consequence a bad tax. From a moral standpoint any tax measure that does not “pass the litmus test” of fairness and equity should either be substantially amended or repealed. There are situations in the present administration of the Levy, which cry out for adjustment as follows:
1. The EC$2,000 floor for the payment of the Levy should be an exemption for all taxpayers. In other words no one should be required to pay on the first EC$2,000.
2. The EC$50 per day penalty for late filing should be replaced with a penalty based on a percentage of the return as is the case with Social Security.
3. The grace period for the late filing of returns applied to persons with earnings less than $2,000 should also be extended to persons earning over $2,000 The grace period generally should be extended until the end of the year.
4. The self-employed and the employee should pay the same rate.
5. The employers should not be required to pay 50% of their employees Levy return given the fact that they are required to file returns as well. The present system is a disincentive to job creation and salary increases.
6. Clear provisions need to be in place to define and assess the self-employed.
But perhaps the most important aspect of fairness in any tax measure is that every citizen should pay his/her fair share. In the circumstances of Anguilla at present Government employees and employees of large firms pay the brunt of revenue earned from this measure while many self-employed persons are not captured by the system. And unlike Social Security that has a direct benefit for the taxpayer the Levy provides no incentive to be compliant. A tax measure that allows non-payers to escape with relative impunity is unfair to those who pay; is therefore a “bad tax”; and must be substantially amended or repealed.
The Chief Minister has consistently claimed that this is not his tax --- it is a British tax. However, over the past months he has made considerable amendments to Act without British intervention. Will the Chief Minister be forced to introduce new tax measures to meet a possible budgetary short fall? And if so will he ensure that they are fair and equitable? Will he be prepared to repeal the Levy since he is now boasting a surplus on the recurrent account? Will he blame the Governor? Or will he plan another masquerade?
By: Mr. Victor F. Bank
Victor Banks is a former Finance, Economics, Commerce and Tourism Minister on Anguilla. He is presently the leader of the Oposition Anguilla United Front Party, writer and author of a weekly political article for theAnguillian News Paper, lyricist, and a self-employed entrepreneur.
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