Turks And Caicos Announces 2014/2015 Budget
by Mike Godfrey, Lowtax.net, Washington
28 July, 2014
The Turks and Caicos Islands (TCI) Government is to boost spending by five percent, funded by a number of tax measures, many of which undo reforms implemented under an interim Government installed by UK authorities.
The Government anticipates that revenue will grow by 2.5 percent, based on ambitious growth forecasts, which come despite a drop in economic activity in 2013/14 compared with a year earlier.
Under the program with the UK, the Government turned recurring budget deficits into surplus. A surplus of USD47.6m was posted in 2012/13, falling to USD30.7m in 2013/14. The TCI Government is confident that it can maintain stable finances with its own policies, which it considers better take into account the nature of the TCI economy.
A number of tax reforms are proposed for the coming fiscal year. First, the Government will transfer USD1m from dormant bank accounts – those that have been inactive for over seven years. Accounts holders can make a claim for repayment and be refunded after due diligence has been exercised, the Government said. Second, the Government will expand the Hotel and Restaurant Tax to tourism services provided by independent providers, effective from November, to yield an additional USD1.5m.
Restructured business license fees, agreed with the UK Government and in force since April 1, 2014, will again be revised. From July 1, 2014, revised fees will apply, generating approximately USD800,000. A transitional period will be allowed until August 31, 2014, for businesses to renew their licenses without the imposition of a penalty.
The Freight and Insurance Tax will be halved. The tax is proposed to be repealed from the fiscal year 2015/16, providing that legislation to introduce a payroll tax is enacted.
The measures, including a payroll tax, are being proposed to prop up revenues after the Government decided to ditch plans drawn up with the UK Government for the introduction of a value-added tax. These plans were deeply unpopular and the Government instead decided it would proceed with a payroll tax.
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