Significant Contribution
Filipinos provide legendary service
I am happy to see an overdue public discourse on the contribution made to the local economy by migrant workers. According to FSC statistics, in 2013, $74.9 million was remitted from the Turks and Caicos Islands through three licensed money transmitters, International Transfer Company Ltd. (doing business as CAM), NCS eMoney Services (offering MoneyGram services) and The Money Center by Fidelity Ltd. (offering Western Union services). The vast majority of these funds, about 70%, were remitted by migrant workers from Haiti, the Dominican Republic, the Philippines, and Jamaica, though persons from over 75 countries as diverse as Argentina and the Congo to Serbia and China remit funds monthly. If we are to be generous and say that migrant workers on average remit 33% of their take home pay then we can conservatively estimate that they would have made a contribution of $224.7 million to an economy whose size at the time would have been in the neighborhood of $560 million. This contribution was made in the finest of free enterprise traditions, the payment of wages for the provision of services. Migrant
Much of the construction is done by Haitian and Dominicans
workers can be justly proud of their role in the economy of the TCI; so to my Haitian brothers and sisters, merci; to my Dominican amigos, muchas gracias, at sa aking kapatid na lalaki Pilipino, salamat., and to all the Yardies ‘big up yuself’.
With its strong complement of migrant workers, Beaches is the major driver of the TCI economy
Taxes
There are those who would seek to advance the idea that funds remitted by migrant workers should be taxed. Presently, Domestic Financial Services Sales tax is payable on local money transfer fees at 10%. The argument seems to be that the funds being sent should be taxed. Now there are a plethora of reasons why this would be socially unjust, bad public policy, and bad economics. Here are a few:
Far more funds are sent out of the island through the banking system by white-collar workers and companies repatriating profits etc., than are sent by the working class. Yet we would propose to tax the working class and leave the white-collar worker and capitalist to move money freely without concern for a tax. I understand the frustration with the process of agreeing on a tax but do not believe the fair minded people of the TCI with such a keen sense of justice, and repulsion of themselves being oppressed would readily agree to a solution built on the backs of the poorest and most vulnerable in the society. We ought to be seeking to protect the vulnerable, not to take advantage of them because their protests would have no ear to care, boardroom to resound in, or halls of power to echo through.
If we were to tax the repatriation of the wages of labor then we should also tax the repatriation of the profits of capital. Our banks, RBC, CIBC FCIB, and Scotiabank, would then, in the name of equity, be required to pay a tax on the remittance of their profits to their home country. I do not believe we want to set out on this road. We are at a stage where we need to encourage
Any tax should be shared
foreign direct investment, not chase it away with the risk and precedence of taxing the repatriation of earnings. On the eve of the long awaited formation of the Invest Turks and Caicos Islands Agency, let us not add unnecessarily to the considerable challenges which that body will face.
Finally, a tax on remittance outflows lends itself too easily to avoidance. Migrant workers in the US send more money to Latin America with people travelling than by either banks or MoneyGram. Taxing remittances would only encourage the use of various informal methods of remitting funds which comes with it a significant increase in money laundering and terrorist financing exposure. With the significant work done by the FSC, our legislature and the banking system, to improve TCI’s compliance image and practices, it would be irresponsible to incentivize actions which would put the country at further risk. We have a hard enough time securing our borders against the illegal movement of people without increasing the work of policing the undeclared movement of cash. We need more transactions going through the formal system, not less.
Capital Formation
Capital formation and the growth of indigenous entrepreneurial and middle classes are important to the development of the TCI
It seems to me that a discussion about encouraging the retention of more funds in the local economy would be very useful. Generally speaking as long as we have expatriate workers we will have the remittance of funds to their home countries, however there is an argument to be made to encourage local capital formation. TCI has the good fortune, or bad, that it does not need the capital from savings of its residents to be lent out as investment capital for projects. Thanks to our Canadian banks, projects in the TCI can be financed from the savings of Canadians, and the international capital markets. Yet, if we are to encourage the development of a vibrant business class, we will need savings to be accumulated for use as equity capital by the local capitalist. There may be a role for fiscal policy to encourage this in conjunction with the development of domestic savings and lending institutions more geared towards domestic capital formation and small business lending.
We cannot though expect the migrant worker to participate in retaining funds in the TCI and participating in this capital formation if she is ever mindful of the knock-on-the-door which will see her taken off to the detention center for deportation or if the work permit granting process seems protracted, arbitrary and unpredictable, or if prospects of residence status are remote, or if the loved ones for whom she must care have no opportunity to legally enter the TCI.
We may have 99 problems but remittances is not one.
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