Taxation, economic globalisation and the Caribbean

No one likes to pay taxes. Despite this, there is widespread recognition that their imposition is necessary if citizens are to be provided with social services such as education, health care and pensions.

For most Caribbean countries taxation is problematic. Small populations, relatively low levels of economic activity, high levels of debt, weak administration, and severe and costly challenges, such as that posed by climate change, mean that the domestic tax base in much of the region is unlikely ever to cover the cost of all recurrent and capital expenditure.

The consequence has been that governments have turned to seeking new, extraterritorial sources of income. At its most obvious this has involved encouraging foreign investment, but it has also led governments to oblige visitors to pay multiple taxes and levies, introduce creative but controversial policies to sell citizenship, and to re-position their countries as offshore financial centres charging registration and other fees…..