The introduction of a General Services Tax has been deferred and a suggestion to implement a temporary driver's license has been withdrawn, according to a October 11 statement by the Ministry of Finance. However, effective this month, taxes on vehicle rentals, fuel and telecommunications will be increased and next month the cost for importing goods will rise.
"Based on consultation with various stakeholders and recommendations from the Blue Ribbon Commission the Turks and Caicos Government has decided to deferred/withdraw proposals for the introduction of some revenue measures included in the 2013/14 budget statement," the statement read. Amendments in three existing revenue heads are being made to compensate for potential loss of revenue as a result of the decision.
The deferment (pending further analysis) of the introduction of a General Services Tax would have applied to prescribed services currently not sharing in the country’s tax burden, the Ministry stated. The temporary driver’s license fee of $30 which was to be applied to all renters after the second day of vehicle rental, has been completely taken off the table in exchange for a proposed increase in Stamp Duty on Vehicle Hire 10% to 12% effective October 1. "This increase is based on the policy to synchronise all rates predominantly absorbed by visitors with the “Accommodation Tax” rate, and will have a relatively minor effect on the cost of vehicle rental, the Ministry has said.
An increase in the Telecommunications tax from 10% to 12% is also going into effect from October 1. This increase will be applied to services including internet provided by Telecommunications Providers and shortly an expansion of the base to include cable and internet provided by Television Cable Operators.
The Ministry dismissed suggestions that they are considering a $0.10 a minute surcharge on in-coming international calls. "This is not the case," the statement read. "The TCIG has no intention to introduce any additional telecommunication charges other than those above."
Individuals will also be paying more at the pump starting this month, due to a $0.10 per US gallon fuel tax increase. The Ministry has said it expects the rate increase to have an insignificant effect on the price of gasoline at the pump, stating the following example:
Current Price (pre-increase) $6.00 per US gallon
Fill up (10 gallons) $60.00
Current (pre-increase) $6.00 per US gallon
Fuel Tax Increase .10¢ per US gallon
Post Increase Price $6.10 per US gallon
Fill up (10 gallons) $61.00
Increase per fill-up $1.00
"However this increase should not be realized until all current inventory that was imported prior to the increase is exhausted. It should be noted that the fuel tax does not apply to fuel imported by the Power Company to generate electricity."
An additional measure being undertaken by the Ministry of Finance in its efforts to reach a budget surplus in 2013/14 is an increase in the Customs Processing Fee (CPF) by 1.5-percent. According to the Ministry, the Cabinet, at its 21st meeting on Oct. 2, received and discussed a report from the Minister of Finance providing the results of a mid-term budget review that showed projected deviations from financial targets as a result of additional non-discretionary expenditures arising. The 2013/14 budget contained revenue measures that would render a budget surplus and put the Turks and Caicos Islands Government in a position to continue to refinance its debt in 2016 at sustainable interest rates.
After much deliberation and consideration of the various options to increase revenue, Cabinet concluded that the most equitable option was to increase the Customs Processing Fee from 6% to 7.5% to take effect on Nov. 1. The CPF applies to all importers. It is expected that once the recommendations of the Blue Ribbon Commission are introduced the CPF will return to its current level of 6%. "While the CPF is broad based, its ultimate effect on prices to consumers should be minimal," the Ministry stated. "Any price increases should not be applied until inventories that were imported prior to the increase, are exhausted."