Here are the tax reform recommendations that the UBP agreed with and disagreed with at the time of publication.

“One of the major recommendations was that there should be no major changes to the tax system.

“At that time the Ministry of Finance agreed with that recommendation,” said Dr. Gibbons.

“The second major recommendation was that there should be tax rebates for customs duties for goods sold to tourists. Government agreed with that recommendation and had begun to introduce a rebate to promote duty free shopping,” said Dr. Gibbons.

In regard to customs duty the document favours fewer rates and lower rates and said special concessions should be eliminated. “Our position at the time had been moving towards lower customs duties, but we did not agree special concessions (e.g. hotel concessions) should be eliminated,” said Dr. Gibbons.

As far as payroll tax is concerned, the report recommended a single rate with a credit for full-time employees, with small businesses asked to pay the same as large corporations but with a tax credit element. The remuneration option for exempted companies should also be removed. “At the time we disagreed rates should be same for all sectors,” said Dr. Gibbons. “We thought there should be relief for certain sectors, but we had started working to remove assumed remuneration for international business. Because of OECD pressure that assumed remuneration was eventually removed.”

The report recommends the repeal of the Corporation Services Tax. The UBP agreed it should be repealed as it was very narrowly based, and was providing incentive to provide services in places like Cayman and British Virgin Islands. “So tax was not doing what it intended to do,” said Dr. Gibbons.

The report also recommends the percentage of custom duty to payroll tax should be changed with more burden on payroll. “This was already well underway. Customs was at 37 percent in 1991 which changed to under 30 percent in 1998,” said Dr. Gibbons.

The providers of services should have a licence-fee imposed. “We disagreed with that as we felt it would be a complex scheme and provide and additional burden to implement. We were not sure needed to get additional revenue in any case,” said Dr. Gibbons.

Land tax - the report said it should be widened and increased as well as taxing undeveloped land. Dr. Gibbons said: “We felt should await the 1999 re-evaluation when and review the bands at the time and then it may have required a decision because of higher evaluations. You may recall those re-evaluations implemented by PLP resulted in a huge hike. We were looking to keep it tax neutral. We did not agree with issue of taxing undeveloped land because it would provide an incentive to develop land, rather than keep it open space or undeveloped.”