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?
