Wednesday, 6 November 2013
Aviation carbon taxes and SIDS
In the early part of October, governments attending the international Civil Aviation Organisation (ICAO) Assembly in Montreal reached an outline agreement on a basis on which all civil aviation emissions will be regulated in future.
The decision, which eventually may increase ticket prices, could, paradoxically, also be of benefit to the Caribbean and other small island developing states at risk from sea level change, as negotiations proceed on the detail of what is in effect an ‘agreement to reach an agreement’.
What the UN body decided on were the steps that ICAO’S members will take between now and the next such meeting in 2016. This will involve negotiating the detail of a new market mechanism to enter into force by 2020, the year in which a new UN climate convention is meant to be in place.
Although the decision marks a breakthrough, and brings to an end the view that international aviation was in some way exempt from taxation, it is not clear what shape or impact the final arrangement will have. This is because, at the last minute, opt out language was agreed to meet the concerns of developing countries, including India, China and Brazil, which suggests that there will be an exemption clause that provides a ‘fair and equitable solution’ for countries that have ‘special circumstances or with limited capabilities’.
In theory, the agreement by ICAO should bring to an end unilaterally introduced regional approaches such as the EU’s Emissions Trading System (EU ETS), which threatened to bring about a trade war. However, and controversially, the EU still intends applying its scheme to all carriers using its airspace, other than those from developing nations.
What the new approach will not do is remove measures like the UK’s Air Passenger Duty (APD) as this began life as an environmental tax, but subsequently became a general taxation measure in the form of a distance based ticket tax.
What was agreed in Montreal was that all airlines will join an emissions management scheme; that this would bring to an end nations imposing their own schemes without a global agreement; that the aviation sector will negotiate a carbon tax and market-based mechanism to limit aviation emissions of greenhouse gases; that this likely will include tradeable permits to emit carbon and carbon offsets; and that the aviation sector will seek to introduce new low carbon technology.
At the Montreal meeting, St Kitts’ Minister of Tourism, Ricky Skerritt, made a particularly strong case for the challenges facing small states and the negative impact that taxes on aviation can have on tourism and economic growth in a region that is tourism dependent.
As for Caribbean destinations that want to maximise demand and increase visitor numbers and the amount visitors spend, or the long suffering traveller who sees the price of air travel continuing ever upward, it remains to be seen how all this will impact on the cost of a ticket. Much will depend on what happens to the presently depressed market for trading carbon, how many licences are issued under any global cap and trade scheme, and in what way.
While some nations in Europe and elsewhere previously made clear that that they are committed to removing their own unilaterally introduced ticket taxes, time will tell whether existing environmental ticket taxes, once a global scheme is in place, then become parallel general revenue raising measures.
What was agreed, however, may eventually have a broader positive impact on the Caribbean.
In a side announcement, ICAO and the EC said that they will commit to a Euro 6.5m fund to mitigate the impact of climate change, initially in Africa and the Caribbean, in response to concerns expressed at the meeting about the need for technical and financial support.
In theory, the agreement could also more broadly benefit small island states at risk from sea level change.
In this context, progress is being made, albeit slowly and with difficulty, to carve out a special global space for Small Island Developing States, known as SIDS.
Next year in Apia, Samoa, the third International conference on small island developing states will focus on the challenges facing regions like the Caribbean and the Pacific which are in the process of developing a case based on their unique and particular vulnerabilities.
The conference, which takes place under UN auspices, is intended to identify sustainable development priorities for SIDS for insertion into the post-2015 UN development agenda as, in the UN Secretary General’s words, at a recent a high level meeting in New York: “the world has not paid enough attention to the issues that islanders have had to face alone”. “Many (such) countries are isolated, (their) markets too small to realise economies of scale…. (and are) …. exposed to high risks from environmental threats, especially climate change”.
In part, this process will focus on finding ways to have the international community simplify and prioritise access for SIDS to international funds, including the Global Environment fund, the Adaptation Fund and the Green Climate Fund. SIDS nations are also focussing on achieving agreement on establishing criteria, other than per capita GDP, when it comes to graduating small states from grant and concessionary funding.
All of which will be far from easy as there is a global reluctance to create new categories of state eligible, in the broadest meaning of the word, for special and differential treatment.
That said, however, the agreement at ICAO, itself a UN body, does appear to point to a grudging acceptance that developing countries, especially those that create one per cent or less of the world’s GDP require special recognition in international arrangements; especially when, as in the case of the Caribbean, it can be demonstrated that many of those most at risk are no or very low carbon emitters.
(David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@ caribbean-council.org. Previous columns can be found at www. caribbean-council.org)
Tell it like it is
ST. LUCIA’S Prime Minister Dr. Kenny Anthony might not have many friends and especially among some in Opposition parties across the Caribbean, following comments he made recently at a function in Barbados.
Delivering a lecture at the University of the West Indies, Cave Hill last week on the theme “Education In the Caribbean – Challenges and Opportunities Facing Small Developing States”, Dr. Anthony said some Caribbean countries were refusing to face up to the impact of the global economic crisis.
The outspoken St. Lucian leader said that the tragedy of the times is that we are in the throes of a major crisis such as the Caribbean has never ever experienced before, but we are refusing to face the reality that confronts us and all of us are engaged in one form or another of self denial. It is a pity he did not identify those countries.
Now there are many countries in the region which have acknowledged the magnitude of the crisis at hand and how they are using everything within their means to deal with the problems as they see best. Some have even approached the International Monetary Fund and one or two have opted to pursue home-grown stabilisation programmes, while recognising that unless they stick to the plan, the situation could get out of hand and that the consequences could be dire.
Those who prefer to remain aloof rather than facing up to the facts of the situation and harshness of the crisis, may not want to agree with Dr. Anthony.
But by insisting that there is a real crisis that has to be dealt with, the St. Lucia Prime Minister is indirectly telling those Opposition parties which have been making noises that governments are blaming a non-existing crisis for the state of some economies, that they have no ground on which to stand.
The economic downturn is very real and it has spared no one country in this part of the region, even if some of them emerged from the down quicker than others.
A crisis of the magnitude of what the world has experienced is fodder for Opposition parties. It gives them a platform to criticise governments, especially for the measures taken to deal with the situation which are hurting citizens. The reasoning of some Opposition parties is that the current chronic economic situation is more a case of mismanagement rather than any impact from what is happening globally.
The situation therefore presents the Opposition parties with a golden opportunity to openly castigate governments for their handling of the affairs of their country.
The funny thing about the crisis is that it has been with us since late 2007. The small Caribbean countries have felt the full fury of it and will continue to do so for a while. More of those in Opposition will perhaps get a chance to show what they can do differently, as is the case presently in three Caribbean islands.
Stories abound about those parties who, when in Opposition, had all the answers to the prevailing crisis. The evidence so far suggests they do not and are further out to sea than their predecessors. Ever heard about calypso politics? Then this is it – sing a crowd-pleasing tune while in Opposition. However, as the St. Lucian PM said, people – both Government and Opposition – have to be honest about the current situation and let their publics know that hard and unusual decisions must be made because of difficult global economic conditions.
ALL MUST PAY FAIR SHARE – Labour movement wants to see more emphasis on tax dodgers
By Linda Straker
AS Grenadians earning in excess of EC$36 000 per year prepare to commence paying income tax of 15 per cent on the excess as of January 2014, the Grenada Trades’ Union Council (GTUC) wants the Government to take all measures necessary to ensure tax compliance is not only for public officers, but for all persons who meet the criteria.
Claiming that it continues to be disturbed that a large section of non-wage earners, including self-employed, professionals and the informal commercial sector who clearly earn more than EC$60 000, avoid paying any income tax as it now appears on the law book by manipulating the system, the Council said that proper enforcement of the law will see Government revenue increasing.
“Had these tax evaders been paying their fair share of taxes, the Government may not have had to implement these stringent measures,” GTUC President, Madonna Harford, told reporters at a news conference last Friday, in which various presidents of the labour movement in Grenada expressed concerns and at the same time offered suggestions, as it pertains to the announcement that as of January 2014 all persons who qualified to pay income tax will have to pay.
Calling for Government to take all measures necessary to ensure tax compliance and to make all and sundry pay their fair share, the Unions said that if the proper structure is not put in place, what exists now will be making one section of workers bear the brunt of the “shared sacrifice”, which Prime Minister Dr. Keith Mitchell called for in his National address last week Wednesday.
In his address, he said that the decision to implement and enforce a three-year home-grown structural adjustment programme from 2014, with support from the International Monetary Fund and other international donors, will be a “time of shared sacrifice”.
“Public workers are always the lamb that gets the knife to be slaughtered,” said President of the Grenada Union of Teachers, Lyon Lewis, who is of the opinion that income tax should affect all workers and not a certain section.
“I believe that we should implement a “pay as you earn” tax system, so that everyone will make that sacrifice,” he said, while explaining that teachers who will be affected will be losing between EC$75 and beyond EC$300.
President of the Public Workers’ Union, Adrian Francis, pleaded for Government to allow public officers, whose duties and responsibilities are to collect taxes, to be allowed to enforce the law as on the books.
“We want those in authority to forget about the friendship thing and let the tax collectors collect the taxes,” said Francis, who explained that there are situations where, when tax dodgers are approached all it takes is one phone call and the tax officer has to “leave this person alone”.
“I know that once workers are given a free hand they will be able to collect the taxes, because there are some who can pay, they just not paying, all it takes is one phone call and the collection process has to stop,” he said.
Confirming that they are not opposing the new tax measures because a Government needs to have its people pay taxes in order to run a coun-try, George Mason, who is President of the Commercial and Industrial Workers’ Union, said that the income measure is almost two decades overdue.
“We are not opposed psychologically to the harsh measures, but we are 19 years late,” he said.
As of January 2014, Grenadians earning in excess of EC$3 000 per month will have to pay 15 per cent income tax and Government will also implement new tax measures as it seeks to put structures in place to increase Government’s revenue.
The measure is part of the home-grown structural adjustment programme, which will run from 2014 to 2016. At present, only persons earning EC$60 000 and beyond per year pay 30 per cent income tax. The new tax threshold will be EC$36 000 per year.
Government, according to Francis, hopes to earn EC$24 million at the end of each year. With regards to tax dodgers, Prime Minister Mitchell, who is also the Minister for Finance, said that there will be new policies to deal with persons who are not paying their fair share of taxes.
“Already, Inland Revenue has identified the top 100 tax delinquents and they are being pursued for their taxes owed to the State. This is not simply a fiscal issue; it is a moral issue,” he said.
Without providing the list or names of the top tax dodgers, one senior Ministry of Finance official said that professional service providers are among the top tax delinquents.
Tougher laws to fight financial crimes
Grenada’s Lower House of Parliament has amended nine pieces of legislation to enhance the island’s compliance with the Caribbean Financial Action Task Force rules and regulations.
“The adjustments are aimed at stopping every available avenue to eliminate terrorist financing and money laundering,” said Gregory Bowen, Leader of Government Business in the House of Representatives, who explained that the amendments are not only being done to laws in Grenada, but in other regional territories.
“They too have to comply with the legislative adjustment as the region puts the structures in place to ensure that companies, non-governmental organisations, charities, fraternities and groups of a similar nature are not used to finance terrorist activities,” he said.
The amended laws are the Companies Act; the International Companies Act; the Financial Intelligence Unit Act; the Banking Act; the Offshore Banking Act; Proceeds of Crimes Act; the Interception of Communication Act; the Criminal Code; and the Terrorism Act.
The Companies Act now provides for all NGOs to register under the Companies Act in the same format as company.
“This means that the names of the directors and others associated with the organisation will be known,” Bowen said, who explained that there is growing evidence in many parts of the world that philanthropists and others use charities and NGOs to finance illegal activities such as terrorism, money laundering and human or migrant trafficking.
The Criminal Code amendment specifically makes provision for the criminalisation of human trafficking, migrant smuggling, environmental crimes and piracy. The legislators approved the inclusion of “hostage-taking”, which means a person who seizes or detains and threatens to kill, or to injure, or to continue to detain another person in order to compel a third person to do or to abstain from doing any act as an express or implied condition for the release of the person.
A person found guilty of “Hostage Taking” will be liable to conviction on indictment to life imprisonment. In the area of piracy, it means any illegal act of violence, detention or any act of depredation committed for private gain by the crew, including the master, or the passengers of a private ship, a private aircraft and directed on the high seas, against a ship or aircraft. The penalty is also life imprisonment.
“We are not leaving any room or loopholes in the law for those who may want to take advantage of any situation,” said Roland Bhola, who presented the Criminal Code amendment to the legislators. (LS)
Lewis: GUT will not be pressured
By Linda Straker
President of the Grenada Union of Teachers (GUT), Lyon Lewis, has accused Prime Minister Dr. Keith Mitchell of attempting to put the population against the labour movement and warns that his Union will not be pressured into making any decision to meet the Government’s timeline to sign off on the home-grown programme.
Addressing the Nation last week Wednesday, Prime Minister Mitchell said he and his government appealed to labour unions to be understanding of the nation’s fiscal challenges and be moderate
in their demands, especially during the period of the home-grown programme.
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| UNION LEADERS: President of the Grenada Trades’ Union Council, Madonna Harford, addressing members of the press at a news conference, while President of the Grenada Union of Teachers, Lyon Lewis; President of the Public Workers’ Union, Adrian Francis; and President of the Commercial and Industrial Workers’ Union, George Mason, look on. |
“Furthermore, Government made an offer of modest increases to all unions. The finalisation and success of Grenada’s home-grown programme require an upfront settlement of the wage bill issue,” he said.
But Lewis is of the opinion that the Prime Minister’s message can lead to “serious vexness”.
“By saying that the Trade Unions must accept, otherwise the process will be derailed is grossly unfair. The Prime Minister is attempting to make the trade unions look like a big monster and this can lead to serious vexness,” Lewis told reporters at a news conference last Friday.
In her statement, President of the Grenada Trades’ Union Council, Madonna Harford, said that the membership was unclear about the message from Dr. Mitchell, who is also the Minister for Finance.
“We are somewhat confused by the direct interference made by the Prime Minister that unless the Public Workers accept the wage proposals made by the Government, the IMF and other potential financiers will not approve the US$100 million, which will be available to Grenada,” she said.
“Our affiliates have always been generous in their proposals for wage increases and it’s noted that the last wage settlement accounted for 1.5 per cent actual increases for each year of the agreement for the period 2009 to 2012,” she said.
Legislation against the use of chemical weapons approved
By Linda Straker
NOT only has Grenada signed and ratified the United Nations Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction, but it has adopted it into national law.
This Convention, which was enforced into international law since 1997, aims to eliminate an entire category of weapons of mass destruction by prohibiting the development, production, acquisition, stockpiling, retention, transfer or use of chemical weapons by States Parties.
Once the Bill has gone through the necessary parliamentary approval from both Houses of Parliament, Government will then establish a National Authority whose function and responsibilities shall include to supervise the domestic implementation of the convention and to perform any tasks that may be required by the minister pursuant to the convention.
“The National Authority shall have all such powers as may be necessary for, or in connection with or reasonably incidental to the performance of its functions under the Act and may co-opt one or more persons to attend a particular meeting of the Authority for the purpose of assisting or addressing the Authority,” said the explanatory notes to the Bill.
Under the law a person who uses; develops, produces, otherwise acquires, stockpiles, or retains; participates in the transfer of, directly or indirectly; engages in military preparation, or in preparations of a military nature to use; participates as an accomplice, attempt, assist, encourage, induce in any way anyone to engage in any activity involving chemical weapons, commits an offence and is liable to imprisonment for life.
A person commits an offence if he or she used a riot control agent as a method of warfare and can be imprisoned for no more than ten years. When a person has been convicted of an offence under the Chemical Weapons Act, anything seized by means of which or in respect of which the offence was committed can be forfeited by the Court.
Provision is made for limited use in the area of industrial, agricultural, research, medical, pharmaceutical or other peaceful purposes. If a national inspector has reasonable grounds to believe that there maybe chemical weapons on any premises, he will have to seek the consent of the occupier or where that permission cannot be obtained an application can be done through a magistrate.
Climate change a problem for health sector
Climate change is quickly becoming one of the biggest challenges to the health sector.
Pointing not only to the declining quality of air, and a rise in infectious diseases, Barbados’ Minister of Health, John Boyce, outlined that climate change also has an influence on Chronic Non-Communicable Diseases like diabetes.
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| From left to right: PAHO/WHO Representative at World Health Organisation, Gerry Eijkemans, and Caribbean Programme Co-ordinator, PAHO/WHO, Dr. Ernest Pate, greet Barbados’ Minister of Health, John Boyce, at the start of Tuesday’s workshop. |
He stressed therefore that the proper health programmes must be implemented to deal with such.
Addressing Tuesday’s opening ceremony of the Caribbean Climate Change and Health Workshop at the Amaryllis Hotel in Barbados, he said that Caribbean countries rank amongst most vulnerable to climate change particularly regarding the intensity and frequency of extreme weather events.
“Increase land degradation due to droughts and soil erosion due to heavy rainfall events and a rise in sea levels will lead to saline intrusion in aquifers of Caribbean countries which depend on underground water. Climate change and global warming will affect the social environmental determinants of health namely clean air, safe drinking water, food and shelter,” he pointed out.
According to World Health Organisation, between the 1970s and 2004, global warming has caused over 140 000 excess deaths per year and it is being estimated to costing between US$2-4 billion per year by 2030 in direct damage to health.
Boyce therefore said that it was evident that small island developing states must recognise that mitigating and adapting to the impacts of climate change require greater co-operation and co-ordination both at regional and international levels and that there was a need for a multi-disciplinary
approach to reduce the negative health impacts. (JMB)
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