The pros and cons of Turks and Caicos Islands government budget

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Drexwell Seymour is from the Turks and Caicos Islands. He graduated with a Bachelor of Arts degree in Accounting at age 19 and a MBA in Finance at age 20. In 1992 at age 22, he took and passed all four parts of the CPA exam. He is currently part of a credit union exploratory committee and hopes to have credit unions established soon in the TCI. He is an author, his articles are also posted on his website www.drexwellseymour.com

– $391 million expected in revenue in 2022/23. In 2021/22, actual net surplus was $68million.

By Drexwell Seymour

In the mid-80s, when I was in college, a friend of mine came across an article on the Turks and Caicos Islands and if I can recall, the revenue was $14M. My friend was very shocked how low the budget was. Here in 2022, the Turks and Caicos can now brag about a budget of more than $391M. The million-dollar question though is how impactful this will be on the average resident of the Turks and Caicos Islands. Therefore, in this article, I will analyze the budget and discuss the pros and cons of the budget.

A brief review

This is by far the largest budget to date and the top three main contributing areas are accommodation tax of $91M (22.9%), Import duties of $89M (22.6%) and stamp duty on land of $89M (20.2%).

It should be noted that the stamp duty on land was the highest component for the year ended March 31, 2022, and represented 22.3 percent of the actual revenue. The stamp duty on land has more than doubled when compared to the year ended March 31, 2021. For the year ended March 31, 2021, the stamp duty was $36M and for the year ended March 31, 2022, the stamp duty was $87M. It is very much possible that some of the stamp duty revenue collected for the year ended March 31, may be related to sales for the prior year but just got processed the following year.

The recurrent expenditure budget for 2022/23 is $326M. Of that $326M, $129M is related to personnel costs and represents 32.7 percent. The next highest charge is NHIB and Hospital charges of $60M representing 15.2percent of the expenditure budget. This expense has increased by more than $4M when compared to the actual outcome of 2021/22. The SIPT and Civil Recovery Action Expenses are still line items and are $4.8M and $3.6M respectively.

The Development Budget is $50M. Of that $50M, 11.9 is for South Port Redevelopment. $1.9M is for boats for police, $400K for the mobile station $3M on drainage, 2.75M on remedial work to ponds and bridges, $2M for construction of a floating dock, $2M on digitization.

The pros

The budget is very aggressive, particularly the capital budget. This is a good thing and hopefully, these projects can be completed in this financial year. Sometimes projects seem to take forever to start, and some projects don’t even start despite them being budgeted.

Hopefully, the investment in the boats and mobile station for the police, will help the police to alleviate crime. Police expenditure increased by more than $4M.

Based on the budget, the government is optimistic about the tourism and the real estate market which of course is the driving force behind our economy. If the budget is realized, this will be good news for the people and hopefully will trickle down to the average person.

There is also a significant increase in social development from $3.6M to 5.8M which is quite needed in our country to assist the social needs for the residents.

The Turks and Caicos continue to be under siege and threat from illegals and so it is great to see a significant increase in the ministry of immigration and border services.

The public debt held by TCIG is only $696K and with the significant surplus for 2021/22, the government may not have to borrow any additional funds at this time.

The cons

The government continues to spend a lot of money on NHIB and the hospital. This must be addressed urgently. I believe we need to recruit more visiting specialists for a short period of time who can see multiple patients in TCI rather than sending individuals overseas so frequently. We also need to review and reduce some of the benefits that NHIB provides. Quite frankly, NHIB is such a generous program. According to the NHIB budget, 15.7M will be on overseas medical treatment, $3.6M on overseas travel and 975K on overseas subsistence.

Close to $6M is being spent on property rentals. I don’t see any plans to reduce this. In fact, the rent has increased from $5.3M to 5.9M. There is a building that was purchased by the previous administration for the use of a technical school. This building remains unoccupied, and I could not tell from the budget if there are plans to utilize this building.

Grants and contributions have decreased from 18M to 10M. I am unsure as to why this is the case, but this should be a great concern.

I believe the government national radio station needs to be improved significantly but based on the budget, there is not a significant increase in expenditure for Radio Turks and Caicos.

The subvention to some of the statutory bodies is too high. I think government should create a central shared body where some of the functions such as accounting can be provided to the statutory rather than hiring full-time chief financial officers for each statutory body.

Finally, the hospital debt continues to be excessive which is currently outstanding at around $66M.

Conclusion

One of the greatest factors affecting the residents of the Turks and Caicos is the high cost of living, and I cannot tell from the budget if there are any initiatives in place to address the cost of living. What is the point of bragging about a budget of almost $400M when the average person continues to suffer?

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