Turks & Caicos 2005/6 Budget Approved By Lawmakers

by Amanda Banks, Tax-News.com, London

27 April 2005

The Legislative Council of the Turks & Caicos Islands have passed the government's 2005/2006 budget plan after a week long debate in which opposition members expressed fear that the proposals promised to send the budget into deficit.

The budget bill provides for recurrent expenditure of $122.9 million, a 1% increase over 2004/05, and an estimated Recurrent Revenue figure of approximately $127.5 million, a 9% increase over 2004/05.

Neverthless, opposition members attacked the plans, arguing they were "destined to be another deficit budget."

Defending the measures presented in his budget speech, Minister of Finance, Health and National Insurance, the Hon. Floyd Hall in his Budget Address entitled, 'Consolidated Policy Measures to Finance our Development Agenda', sought early on to silence what he termed, "Noises insinuating that the country is broke".

He assured the people that "the country is on firm financial footing" with a "buoyant economy". Drawing on figures to back his statement, the Minister stated that, "On March 31, 2005, the Government had $17 million in the bank, including reserves of $6.2 million".

In recapping on the 2004/2005 financial year, Hon. Hall, termed it a "very important and successful year for the development of these Turks and Caicos Islands". He noted, "recurrent revenue grew by 12% over 2003/04 to $117 million", surpassing the estimated $110 million.

On the issue of public debt, the Hon. Minister noted, "The total disbursed debt was about $43 million on March 31, 2005, an increase of $23 million compared to 2003/2004" yet $13 million lower than the 2004/2005 estimate.

In expounding on the 2005/2006 Budget, the Hon. Minister noted, "We are conservatively estimating Recurrent Revenue at $127.5 million, a 1% increase over 2004/05 outturn".

The Consolidated Fund, year end recurrent surplus is estimated to be around $4.6 million for 2005/06.

In reference to the Overall Development Expenditure for 2005/06, a figure of $80.4 million was presented of which $22 million will be locally financed. Loan funded development expenditure is estimated at $34.4 million. Projects to be financed by capital grants and by funding from private finance initiatives are estimated at $11.8 million and $12.2 million, respectively.

A number of recurrent revenue measures are scheduled for implementation during the financial year. They are as follows:

• Effective June 1, 2005 the stamp duty on land transactions in all islands, other than Providenciales will be increased to 5 % from the current rate of 3%. The rates on Providenciales will remain unchanged.
• Effective May 15, 2005, the stamp duty ordinance will be amended to allow vehicle hire stamp duty to be assessed on 10% of the total rental value.
• The Business Licensing Ordinance will be amended to allow for a new classification of businesses as well as the introduction of a $50 administration fee.
• A 'port security charge' equivalent to a $3 per ton increase in cargo dues will be introduced.
• The price for new passports has been increased to $50 and $75 for children and adults, respectively and $100 replacement fee for the loss of passports.
• Business Licenses will now have to be renewed annually instead of owners being issued indefinite licenses as was previously the case.

The Hon. Minister also highlighted the main areas of cost for recurrent expenditure. They are as follows:

• Employment cost across all ministries is estimated at $62.3 million, which accounts for 50.7% of overall costs.
• Debt service payment of $2.7 million
• The subvention to the Tourist Board has been increased by $100,000 to $4.1 million
• Airport joint venture cost is estimated at $4.5 million
• Overseas Medical treatment cost at the Grand Turk Hospital is increased to $4.5 million
• Student scholarship costs are $8.8 million
• The subvention to the Community college is estimated at $2.0 million.

With the revenue and expenditure outlook for the financial year presented, the Minister expressed his confidence in the ability to contain the rate of recurrent expenditure growth as a result of measures either already implicated or on the path to realization.

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