Premier’s responses to the Leader of the Opposition’s questions at the Third Sitting of the Second Session of the First House of Assembly of the Virgin Islands
Tuesday, 6th January, 2009

Question 1  ~~Adz:Right~~
Mister Speaker, would the Honourable Premier please inform this Honourable House if and when His Excellency the Governor will grant the wish of the then Leader of the Opposition, (2003 to 2007), to have the investigation into the alleged evasion of stamp duty on land transfers carried out?

Mister Speaker plans are in progress to commence the Commission of Enquiry into the alleged evasion of stamp duty on land transfers.  To date, the Terms of Reference have been established and discussions are being held with a view of selecting a Commissioner.

Question 2
Mister Speaker, would the Honourable Premier please inform this Honourable House how the tourism arrivals for November 2008 compared with those of November 2007?

Mister Speaker, at this time, only information for overnight visits has been completed, and this provisional data up to October 2008, indicates a decrease in overnight tourist arrivals of approximately 22 percent from the same period in 2007.  Once information for the cruise visitors is tabulated, the Honourable House will be updated with regards to the overall tourist arrivals for the said period.

Question 3
Mister Speaker, would the Honourable Premier please inform this Honourable House whether the level of our financial services business has been affected by the downturn in the world economy?

1. Mister Speaker, the level of activity in the Territory’s financial services industry has indeed been impacted by the general down turn in the global economy.  Due to the economic climate worldwide, 2008 was a year of little to no growth in financial services.  Although the revenue estimated for the fiscal year 2007 has been collected, it is simply too early to discuss with accuracy the full magnitude of the effects of these events on the local industry. 
 
2. Captive Insurance and Mutual Funds predicted to experience the greatest effects as these sectors are the most likely to have been affected by the credit problems.  Mister Speaker, the Commission has already seen evidence of this in the increased number of requests by funds for voluntary cancellation and by notification of suspensions of redemptions as well as a downturn in the number of new applications for recognition.  This may mean minimal growth in these types of structures particularly in the first half of this New Year.

3. With regards to company incorporations, 2007 was a year of unprecedented growth with approximately 75,000 new companies formed. 2008 was not as robust as new incorporations were down 20% at the end of the year.  However, preliminary analysis suggests that the Registry is poised to record its 3rd best year to date in respect of new incorporations and revenue for the corresponding period has not fallen as sharply.

Question 4 ~~Adz:Left~~
Mister Speaker, would the Honourable Premier please inform this Honourable House of the status of the financial reform project that was introduced in 2006?

Mr. Speaker as you may well be aware, the Financial Reform project is on which is quite far reaching, significant and comprehensive. It has been designed solely to bring greater levels of expediency, transparency, efficiency and accountability into the British Virgin Islands public sector and hence consequentially improvements in the manner in which we govern ourselves. Furthermore, in view of the ever tightening fiscal constraints which we are now facing as a result of the global, regional, and national economic slowdown, it is paramount that the expenditure patterns in the Government of the Virgin Islands are such that we receive the maximum utility of our resources for all our citizens from each unit of expenditure.

There must exist as well Mr. Speaker, the support structure that is used to effect this prudence and efficiency must be such that it promotes such behaviors of efficiency, expediency and good governance. There is therefore no question Mr. Speaker of our continued need to improve on the status quo, and my continued commitment to achieving this.  However Mr. Speaker, in light of the far reaching implications of the system we intend to implement, I have suspended the project for a period of one year during which time we will review the situation.  

Mister Speaker, we have had advice from two experts in England that the Reform as proposed is very sophisticated.  Even in England it is not so structured, and these experts will be visiting the Cayman Islands to see how the Reform is getting on in that Territory, and how it is accepted by the present Government as I have been informed that there are some hiccups in the system there, and these matters should be solved before the introduction of the Reform. 

Furthermore Mister Speaker sessions must be held with the Cabinet and the Members of the House of Assembly, to ensure that Elected Members are well aware of what is being introduced so that we can assist in explaining it to the public.

Question 5
Mister Speaker, now that oil prices have gone down, would the Honourable Premier please inform this Honourable House as to when he expects inflation to fall, particularly inflation of the cost of food?

Mister Speaker, inflation in the Virgin Islands is determined largely by external sources that is, mainly price changes in the United States our major trading partner.  Historically, inflation in the Virgin Islands has been higher than the US mainly as a result of costs associated with doing business in the Virgin Islands (such as wages, rent, energy, transportation and duty), which are incorporated in the final price of goods and services. 

In addition Mister Speaker, price changes in the Virgin Islands lag after changes in the US especially in the case of price declines therefore we would expect to experience some decline in the overall level of prices in the future if the US’s rate of inflation continues its decreasing trend.  However, given the external composition of inflation it is difficult to forecast future inflation rates for the Territory hence, we cannot say with certainty whether or when inflation will decrease.  The Government is however revisiting the base used to calculate the inflation rate and will be revising it so as to ensure that accurate and reliable pricing data is available for policy decisions.

Mister Speaker, It must be borne in mind however, that increase in oil prices is not the only factor that affects the inflation rate.  The cost of services such as medical, legal, security, accountancy, etc. and other factors, all play a part in helping to increase inflation.

Question 6
Mister Speaker, would the Honourable Premier please tell this Honourable House whether the ad-hoc committee set up to review payroll tax is expected to submit a report, and would the report be laid on the table of this House?

Mr. Speaker the committee to which the Leader of the Opposition refers, meets on a regular basis, and is vigorously examining the various provisions of the act and the effect that it has on the citizens of the Territory.  While I will not pre-empt the findings of the committee, Mr. Speaker, I do know that they are considering proposing a few amendments that will enhance the Act such that its application will be more equitable, and not affect some types of businesses unfavourably.

Mister Speaker, I expect that I will have a report within the first half of this year. Upon receipt of the report, I will of course Mister Speaker, refer it to Cabinet and the Cabinet will decide what should be done with the report.  I cannot at this stage say what will be done with the report, but I do hope that Cabinet will agree that the report should be laid on the Table of this Honourable House.