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**fnpsr** » 2012-01-15 01:08

Tenman, thanks for the lively and respectful discussion. As I said before reasonable minds will at times disagree, but I am sure we are on the same page, in that that we both have the island of Antigua at heart and want to see the best for it and the good people. Once again, thanks!!

"Let's fix the little things before we attempt to fix the little things."

**fnpsr** » 2012-01-14 17:07

A synopsis of the financial industry in the Cayman Islands (Cont'd):

“The Cayman Islands are the fifth-largest banking centre in the world,[27] with $1.5 trillion in banking liabilities.[26 ] There are 279 banks (as of June 2008//en.wikipe dia.org/w/index .php?title=Caym an_Islands&acti on=edit), 19 of which are licensed to conduct banking activities with domestic (Cayman-based) and international clients, the remaining 260 are licensed to operate on an international basis with only limited domestic activity. Financial services generated CI$1.2 billion of GDP in 2007 (55% of the total economy), 36% of all employment and 40% of all government revenue. In 2010, the country ranked fifth internationally in terms of value of liabilities booked in the Cayman Islands and sixth in terms of assets booked. It has branches of 40 of the world's 50 largest banks. The Cayman Islands are the second largest captive domicile in the world with more than 700 captives, writing more than US$7.7 billion of premiums and with US$36.8 billion of assets under management.[28]”

“Let’s fix the little things before we attempt to fix the big things.”

**fnpsr** » 2012-01-14 17:05

A synopsis of the financial industry in the Cayman Islands:

“The Cayman Islands are a major international financial centre. The biggest sectors are "banking, hedge fund formation and investment, structured finance and securitization, captive insurance, and general corporate activities."[26 ] Regulation and supervision of the financial services industry is the responsibility of the Cayman Islands Monetary Authority (CIMA)."

**fnpsr** » 2012-01-14 17:04

Tenman, the points you made have merit and anytime you take money out of the pockets of consumers it is going to have a negative effect on the economy. I have no problem with Antigua not wanting to have a PIT, but all I am saying is that you cannot afford not to have one at this time. Before a determination can me made, you have to do a comprehensive study, analysis and debate of the merits.

Bermuda, the Bahamas and the Cayman Islands, while not having a PIT, they all have a tremendous source of indirect income, which his sufficient to make up for the lack of a PIT. Unfortunately I cannot say the same for Antigua.

The Bahamas is just off the coast of the US and they get steady flow of US tourists. The Cayman Islands have an inordinate amount of banks around (300) and financial institutions for its size. A licensing fee for a bank in the Cayman Island can run you around US $50K. A work permit for a clerk can set you back up to US $500. A work permit for a CEO will blow you away at about US $20K.

**tenman** » 2012-01-14 15:56

fnspr if you take the time to look at businesses which made the most moneys for the past 7 years, you will find it was those who had government as a major customer. Contractors who made money were tied to government. Overseas consultants from places like Trinidad, made some good moneys here because their major client was government. Government ministers whose businesses (eg law firms) are tied to government also did well. The major IT company in Antigua which has existed for more than 20 years here and always managed to win tenders (even through illegal means see www.caribarena.com/antigua/education/7924-irregularities-at-education-board.html), is tied to government.

You ask where the difference will come from: I have already stated via consumption taxes let me also add, via needed cuts in government waste (which was also stated in my very first post to this article).

..

**tenman** » 2012-01-14 15:36

fnspr if you speak with joiners and other persons in the construction industry, you will hear tales of how the frequency of the repair jobs has diminished, even before 2008. The income tax policy because of its ability to double tax persons has seen some potential investors look elsewhere. If Bermuda were to impose income tax don't you think that businesses which are primarily there because of the no income tax policy, some will leave? Well the same thing happened in Antigua because of this, no income tax policy used to be a selling point to investors interested in such. It was advertised via our tourism magazines.

fnspr I am certain that if you listened to the US debate, when it was proposed that the capital gains tax be lowered, there were persons who suggested it would be a bad idea since it would only increase the deficit. In the US you have had your economy continue to sluggishly expand via GDP growth, but in Antigua we have now seen 3 years of GDP decline and 2012 is expected to be a 4th year. When you think of policies which create real growth via the private sector, I am yet to see a credible argument for continuing with the same no growth policies.
..

**tenman** » 2012-01-14 15:17

fnpsr, as usual I too am enjoying the debate. When the stabilization fund came into being, in my experience it had the effect of destroying jobs in the private sector. Instead, government expanded and we can see the examples of projects it got involved in like the over spending of moneys by the ministry of sports, badly constructed roads etc. The cut in the private sector occurred because the household that used to hire a helper 3 days a week cut back either completely or by a day or two. The house hold that used to hire some one to cut their g** saw them too cutting back on this expenditure. Some families that used to give their children moneys to buy lunch also cut back. This came about due to the programs like the government school meal program. The effect of this is that businesses that depended on their patronage closed. If you were to look closely at Antigua's GDP's growth since 2004, much of it has come via government spending. I also noticed something that I admit may not be the entire picture, but during the past six years, most (the majority) new home owners were government officials.
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**John French II** » 2012-01-14 14:30

Notes From A Native Son Of The Rock. Friends, you have demonstrated for all to see, another sobering approach to research, analysis, and recommendations . Dr. Isaac Newton has said it best which fully supports your efforts: Quote:

Thanks for a sobering challenge packaged in your constructive call for clarity/accountability. Although I despair about the state of our local political realities, I am not prepared to give up on our people. Overtime and pointed in the right direction, greatness awaits! I wanted however to possible change management handles and transformationa l tools to counter the prevalence of “ethical bad-mindedness” and “transactional tactics” that define governance in Antigua and Barbuda.

See Comments & Read more: www.caribarena.com/antigua/opinions/opinion-pieces/dr-isaac-newton/99378-how-to-win-in-2014-part-i.html#ixzz1jSRIV4el
This SIDS need more Citizens of your Capacity and Honesty. They only need Seventeen. Some would say Thirty Four of your calibre. Let's hope that many who enter this Portal will be blessed with your Wisdom. Brothers, Go Well! Much Respect!

**fnpsr** » 2012-01-14 13:04

When you look at the Bermuda economy, you can definitely see how they can afford not to have a PIT. When you look at the Antiguan economy, you can definitely see how they cannot afford not to have a PIT.

As I have said before, I believe that the entire tax system needs to be revamped. Therefore, you cannot take one aspect of the tax code in isolation and expect to solve the problem. Doing this would be very shortsighted and create more problems than you intended to solve.

“Let’s fix the little things before we attempt to fix the big things.”

**fnpsr** » 2012-01-14 13:03

Reasonable minds will always disagree. However, when you take the PIT out of the Antiguan Budget, the difference will definitely have to be made up. With the PIT abandoned, it is no doubt that folks will have more money to spend and as you suggest, the shortfall for the PIT will be recouped in the form of indirect taxes mainly in the form of consumption taxes, primarily through ABST. Folks at the lower end of the socio-economic ladder will usually spend the savings on food and bills. Therefore less taxes will be collected. Folks at the higher end of the socio-economic ladder will usually save it. They will not go out and spend more than they have been accustomed to. Thus, again less taxes.

Lowering the capital gains tax in the US was not used to balance the budget, as Antigua would need all forms of taxes to balance its budget, but rather used to stimulate growth and encourage folks to invest in plant and equipment and thereby provide jobs. The theory here is an indirect benefit to the government, through the form of income taxes from the added jobs.

**fnpsr** » 2012-01-14 13:02

Tenman, I enjoy the debate and I appreciate your response. Let me first say that I think we agree that the 14% tax in Bermuda is similar to the social taxes in Antigua. They may be called differently, but they accomplish basically the same end result. Again, these are trust funds and should only be used for the intended purpose. The one big difference I would like to point out is the Health Insurance. I get the impression that all Bermudans have access to adequate healthcare. I cannot say the same for Antigua.

I did not mis** that both governments depend on indirect taxes to carry out their missions. While Bermuda has no PIT, it makes a tremendous amount of money from indirect taxes. Therefore it can afford not to have a PIT. I am not yet convinced that Antigua can afford not to have a PIT.

**tenman** » 2012-01-14 00:15

fnspr the point is the 14% goes towards programs like hospital levy, Health Insurance, retirement scheme, training scheme. I am trying to get across to you that the 14% they pay generally encomp** what is paid here for MBS, SS and ed levy.

You highlighted the claimed differences between Antigua and Bermuda but miss that both countries depend on indirect taxes for the majority of government revenues. I disagree with you in terms of Ryan needing to discuss what will make up for the short fall. For at least the past 3 years MP Browne has been breaking this down via his budget statements. The idea is to leave moneys in consumers pockets and they will spend it and perhaps more. Much of it will be collected via consumption and other taxes. The best example I can find in the US is when the capital gains tax was lowered to 15%. Instead of seeing a decrease in tax revenue collected, they saw instead an increase. Simply following your logic, naysayers would have argued there would be a shortfall when the opposite actually occurred. Isn't Obama arguing that lowering the payroll tax will stimulate the economy and eventually increase government revenue?
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**OUTOFANTIGUA** » 2012-01-13 23:00

What a bunch of Hypocrites and Vagabonds. As one Blogger writes (No reasoning and Logic in Antigua for a long time) really? Were'nt anyone in the country listening to the ALP leaders calling for the rollback the ABST the abolishment of the (PIP)or personal Income Tax over and over again and again trying to let this UPP government see the stagnation and eventual starvation which could be the results.handcuf fing Big and Small buisness not to mention squeesing the middle class also starvation for the havenots. Its disappointing to see the wanton disreguard for a former government who guided this country for 28YRS. Does anyone really believe the ALP could have lasted that long not making huge contributions not to mention Piloting this ship through many storms both natural and manmade from coliding Economically with disasters abound? They are wise men tried and tested and came through as one of the BEST in the eastern caribbean.Meant ime you the learned ones do the math(28devided by7= a BIG4) GO FIGURE.

**fnpsr** » 2012-01-13 20:14

Ryan would have been better served if he had outlined a proposal to revamp the tax system rather than calling to scrap it.

If this is the same Ryan who had sat on the ABIB board and allowed them to make bad decisions without objecting, I would take whatever he says with a grain of salt.

“Let’s fix the little things before we attempt to fix the big things.”

**fnpsr** » 2012-01-13 20:12

In 2009 Bermuda produced $1.543 billion from international companies. This amount is greater than the entire Antiguan economy. Of this amount, Bermuda produced $876 million from real estate and rental. In addition, it produced $923 million from financial “intermediation ”. Note that from the hotel and restaurant sector it produced $308 million.

I list those to make the point that they can afford to not have a PIT. Unfortunately, I cannot say the same for Antigua.

It is also no doubt in my mind that Antiguans are averse to paying taxes, be it direct or indirect.

You can look back and say that prior to 2004, there was no PIT and that government, red and blue have wasted a tremendous amount of money and have nothing to show for it. Now that times are hard, there is a clarion call to scrap the system, without offering a suggestion on how to reform it.

**fnpsr** » 2012-01-13 20:11

Tenman, I do not understand the point you are trying to make. Those social benefit programs that you are talking about are good. And as I have already said, they are special earmarks that should not be used for the daily operations of the government.

It is no doubt in my mind that the tax system in Antigua needs to be revamped. However, I do not see any discussions on how this should be done and what is to replace the PIT and how the difference should be made up.

It is nice to compare Antigua to other places but I think you have to look comparatively. For example Bermuda is 58.8 sq. miles while Antigua is about 108 sq. miles plus Barbuda. Bermuda has a population of around 71K and Antigua is about 80 – 100K. The workforce in Bermuda is around 40K while in Antigua it is estimated at 30K Bermuda’s GDP is around $5.7 billion (2009) and Antigua is around $1.4 billion (generous). The GDP per capita income for Bermuda is around $87K while Antigua’s is around $14K.

**tenman** » 2012-01-13 18:29

fnspr read the law www.bermudalaws.bm/Laws/Consolidated%20Laws/Payroll%20Tax%20Act%201995.pdf, its the same thing (pay attention to Approval of schemes):
Quote:

1) The Minister may by order made under this section approve for the purposes of this Act a scheme of any of the following kinds, that is to say, a health insurance scheme, a hospital insurance scheme, a life assurance scheme, a retirement scheme and a training scheme.

Again our tax system before 2004 was modeled off of places like Bermuda and the Bahamas. We have things like Medical Benefits scheme, Social security scheme etc.

..

**BEEF** » 2012-01-13 18:16

Sounds a lot like the A.L.P. plan. HHHMMMM

**fnpsr** » 2012-01-13 17:45

Tenman, thanks for responding and taking the time to read the article. However, I must say that the references that you pointed out are earmark funds and should only be used for the purpose intended and not to run the daily operations of the government.

What I was able to glean from the article is that every major employer pays the 14 %. There are varying rates less than the 14 %, depending on the size of the company and the kind of service provided. Additionally, the employer is able to recover 4.5 % directly from each employee.

There is a Social Insurance and this is split equally between the employer and the employee. The employee’s share is $30.40 per week. The employer must provide a list of all employees and the relevant department bills the employer monthly.

Also, the employer must provide Health Insurance to all employees. Again, as in the case of the Social insurance, the cost is split between the employer and the employee.

As you can see, there is no free lunch.

“Let’s fix the little things before we attempt to fix the big things.”

**tenman** » 2012-01-13 16:47

fnpsr we already have payroll taxes (other than simply income tax). They existed before income tax. They are called Social Security, Medical Benefits and Education levy. Both employer and employee have to contribute a percentage. If you add them together they require the employer to submit more than the 14% the url you provided spoke of. Example MBS takes 3.5% from employee and 3.5% from employer; Social sec 5% from employer and 3% from employee; Education levy begin at 2.5 and goes as high as 5% depending on amount (only for employee). We also have companies which offer pension plan (think its now mandatory for hotels) and contribute 50% towards health insurance (since MBS in general is a waste).

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**justin** » 2012-01-13 14:31

At last some sensible views on this important matter. The ABBA seems to represent the true business persons views rather than the obviously politically motivated chamber of commerce!

**Coopin** » 2012-01-13 13:53

Only a very small amount of people pay tax in Antigua. If you work for a business hotel etc....... you have no choice , they take your money. The taxi's , vendors , and self employed don't pay any tax........and they are the majority....... . well we have the government workers, and you know how dat go !

I agree with Mr Ryan,the system needs to be changed !!!

**It needed to be said** » 2012-01-13 13:41

Well said Mr Ryan!
The registered taxpayers in our nation are fed up with the "Peter pay for Paul" system that has been the norm for so many years. While we recognize that the Government needs tax dollars in order to run the country, we feel that the tax burden should be shared by those businesses and individuals that are currently making little or no contribution.

**Dig It** » 2012-01-13 13:08

Who ever said "It's the economy stupid" should be commended! Obviously, we have a current economic system that is everything "anti," and that is anti-savings, anti-productive , and anti-friendly! A talk to many of the businesses in St.John's will show the misery and sadness in their eyes! The Sun has blinded many of them with lost in profits and margins! It is simple, and, I agree with the good gentleman that "no circulation" of extra monies from citizens would add more bleeding to an already struggling economy! It will also create a state of unrest and stravation! Why have an "unfair" tax system that benefitted those who either operate in the underworld or just don't give two-tooths about any paying their fare-share?

**fnpsr** » 2012-01-13 13:04

Tenman, It appears to me that Ryan has used your post of a few days ago to support his call to scrap the system. I think he should give you some credit for it. However, as you know, I believe that some form taxation is needed. As I have advocated before the question is what is fair and just. I have also advocated that the entire tax system should be revamped. I am glad to see that countries actually perform studies to determine what is best for them. I hope Antigua would do the same. I did a little research on Bermuda and before you pop the champagne, I would urge all bloggers to read the article before commenting. This way we can have an intelligent debate about taxes in Antigua.

Please click on the link below and you would see what Bermuda is doing. There is no free lunch!

http://www.lowtax.net/lowtax/html/bermuda/jbrdctx.html

“Let’s fix the little things before we attempt to fix the big things.”

**John French II** » 2012-01-13 12:29

Notes From A Native Son Of The Rock. Let the Congregation say "Amen". You will have them rolling in the aisles and rushing to the altar of the Bretton Woods Bandits and Euro-Buccaneers and Privateers. With Respect.

**Skyewill** » 2012-01-13 11:11

They sis not understand your sarcasm. I hope you know that we all agree that taxes is needed. the system will always need upgrading forever and ever, ok we should always choose to improve no matter how good things seems to be. I never liked the old saying " if it ain't broke don't fix it. That suggest stagnation.

**Lazarus** » 2012-01-13 11:08

First lets start by scrapping Ryan!! To much hot air out of this old goat :lol:

**tenman** » 2012-01-13 10:43

And the choir says amen. The government when it first introduced income tax (labelled then stabilization fund) stated it was a short term method to stabilize the economy. Seems the medicine has helped in making the patient worse. Bermuda instead of going the route Antigua did, actually performed a study which concluded that their indirect tax system was best. Another truth highlighted by the study which is also relevant to Antigua, is government needs to focus on controlling its expenditure. No matter the tax system, continuing the current no accountability for tax payers money (wanton waste) will always result in a short falls
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**From the Side Line** » 2012-01-13 10:35

In my opinion there was nothing wrong with the old system. If the Government needed more revenue all it needed was enforce the law more dilligently. We did not need a PIT at all. But from one thing comes another and so on. The 2% was much better for small businesses and less costly to administer. it's only the poor man feeling it in the end. Cause he cannot pay smart accountants to show him the loopholes, which now they want to close.

**DadliMan** » 2012-01-13 10:32

I hope Harold doesn't listen to this man. My brother, stay the course! Don't allow these detractors and nay-sayers to derail your plans. A country cannot be run without taxes - just ask the IMF

**browngal** » 2012-01-13 10:04

The ALP has always preached for a low tax jurisdiction as is applicable in some of the countries Mr. Ryan mentioned. I remembered in 1976 when the ALP campaigned for the abolition of income tax, the PLM had a retort
"no taxes, what **". It has been tried and proven that low taxation helps the economy because our spending power becomes greater. In St. Kitts, leading up to Xmas, the government cut the ABST by 10% for 1 day. What is the saying, "when the government has no vision the people perishes"? I guess that for 2012 it will be "rescue the perishing".

**JP Farnsworth** » 2012-01-13 10:03

All tax systems are being tested you will continue to pay until they can figure out a better way to get money.
Thank you for your participation in this experiment

**Skyewill** » 2012-01-13 08:10

Haven't had any logic and reasoning out of Antigua for a long time. Thank you Mr. Ryan for your forward thinking. That is one major solution to a serious problem. Here is the challenge. Planning to implementation. It would take years to process and we would need an outside-the-box thinker. Like I always say. Anyone can tax and add more tax What we need is creators of fresh innovative ideas. If all I want is a taxer, then I can hire or vote for “ Racon with the red herring in he hand”

**Mr Sabruski** » 2012-01-13 07:40

Thanks to Cort we are in this mess. I agree with Mr Ryan and share his view that the tax system here is fatally flawed. Well said Mr Ryan.

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