25 February 2011

External Experts Endorse Anguilla 2011 Budget

No Lay-Offs, No Salary Cuts Announced

The Anguillan

The two independent financial experts, John Wiggins and Ved Gandhi, recruited by the British Government to review Anguilla’s 2011 budget with local technocrats, have completed their work on a positive note. They reported to the Government and people of the island at the Rodney McArthur Rey Auditorium on Monday evening, February 21.

Mr. John Wiggins discussing 2011 budget at Forum
Mr. John Wiggins discussing 2011 budget at Forum
They recognised, in the words of Mr. Wiggins, that the Anguilla Government, and its technocrats, had “pursued a very careful and rigorous constrained policy in expenditure” in the budget, suggested some ways of improving taxes, and declared that “the budget stands.” “You’ve got to maintain discipline, but the way that the fiscal picture looks now, and if you do the things we are suggesting, we think you can deliver on the commitment made to the British Government that you would come back to overall budget balance in 2013,” Wiggins said.

The 2011 budget was calculated by the Anguilla Government officials at just over 177 million in revenue and over 188 million in expenditure. “The budget, as presented, included three new taxes,” Wiggins commented, in looking at the revenue measures. "[There was] a 7% tax on telecommunications which was actually implemented from November; an additional tax on petroleum portrayed in the budget as a 7% levy at the pumps; and the 6% Stabilisation Levy…We looked at all the forecasts for all the elements of revenue and we conclude that ..., the taxes that were enforced up to 2010 and the modest increase in the 2011, were pretty reasonable. But this required an extra 21 million from the new taxes and you were a bit behind the game [of collecting] and the position was not as straightforward as it initially looked.

“We also have to bear in mind that Anguilla actually is a very small administration; that the number of people around to administer taxes is very small, and a new tax on petroleum at the pumps is quite complicated. It soon became clear that there isn’t really an administrative apparatus here ready to collect it so we need to re-think that. When we looked at the revenue from the Stabilisation Levy, we realised that we were going to be some significant amount short from what was originally envisaged, so we had to look at ways of making up that shortfall.

Applause from audience
Applause from audience
“On petroleum, it is fairly clear that the easiest way to collect that tax is at the port. All the petroleum you are using comes in through the port and there is a duty of two dollars, at the moment, on gasoline and forty cents on diesel. If you want revenue from petroleum, we think the simplest thing to do is just to put up the duty rate from two to four dollars. That would not be any conciliation to you but, even at four dollars, it would still be less than what most of the other islands around here are paying. And because electricity is already subject to the Environment Levy, it wouldn’t be sensible to put two dollars on each gallon of diesel. So the proposal is only to put ten cents on that, bringing it up from forty cents to fifty cents. We think that should give you five or six million dollars.”

On the Stabilisation Levy, requiring employees and employers to pay three percent of salaries, he explained that there would still be a small shortfall of the target of 177 million dollars in revenue.

Mr. Wiggins said he and his colleague recommended that one of the ways in which the shortfall could be met, was by increasing the current customs surcharge from three to six percent. “Those are our proposals on the revenue side which would generate the revenue that the British Foreign Office was questioning whether you would actually get,” he stated.

“On the expenditure side, and I wonder whether there won’t some unrealistic expectations in London that people here would magically be able to find reductions in public expenditure which could be easily implemented and cause no trouble. It doesn’t seem to be, that it is like that, and you already adopted a very severe discipline in public expenditure. And so, personally, I would not be looking for further arbitrary reductions, but I do think that the Government here needs to get a better grip on its budgetary plans.”

Mr. Wiggins made no mention in the report on any reductions in the number of civil servants or cuts in salaries. This was a fear expressed by civil servants and a claim made by the Anguilla Government that the British Government wanted the civil service to be reduced by 300 members.

Another section of the audience
Another section of the audience
Rather than speaking about reductions of employees, or cuts in pay, Mr. Wiggins said the Government should budgetary plan the development of public services over a period of two to three years ahead. He supported the work of the Department of Public Administration to find a better way to manage civil servants. “Look at their performance. Try to see that people with the right capabilities are placed in the right jobs and get people to be accountable for their performance each year,” he said.

“There is a scheme, which is being developed, and which would require people, from the beginning of next year, to be accountable for their performances instead of, as people tell me, some civil servants say ‘now that we passed our probation, we don’t have to make any further efforts and the Government can be relied on to pay us.' You can’t afford that attitude.”

Mr. Wiggins noted that Chief Minister, Hubert Hughes, had asked him whether he could do a general review of the public service. “This is something which can only be done if you look carefully at the tasks, organisation and staffing, of each of the 35 departments that are in your budget, and that can only be done over a period of time,” he pointed out.

The other expert, Ved Gandhi, who mainly answered questions about revenue matters, said their work was geared towards ensuring that the 2011 budget, approved in the House of Assembly, “can withstand the pressures from all kinds of partners.”

He added: “I can say, now, with a great deal of confidence that this budget stands.”

Earlier, Chief Minister Hughes was grateful to the two experts for their assistance. He joined Jerome Roberts, who chaired the proceedings, in commending all the Anguillian technical officers in the Ministry of Finance for their hard work which the experts found to have been well done.

Mr. Hughes went on: “The exercise, now, could very well have taken place with the budget being signed because we would have been able to collect the taxes that we have implemented…Because we were not able to collect those monies, because our budget was not approved, we lost significant revenue.”

The question and answer period which followed, took the meeting to its conclusion to about 9.15 p.m. – about one hour and forty-five minutes after it began. 

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