Sorting out the tax dispute between the UK Ministry of Defence and the Ascension Island Government may not happen before June. This possibility was put to Saint FM this week by a UK politician. Why should there be a delay? Why is there always a delay? Didn’t a UK Foreign Office minister say he hoped to have the problem all wrapped up in time for the Overseas Territories Consultative Council held in mid-December? This time the reason for delay is because a general election is due in the UK this year, and it has to take place before the end of June. The election may be held just before the June deadline. The fact that everybody in government has gone quiet for the past month on the Ascension tax dispute makes this possible reason for delay more probable.

 

June is also the month when the Ascension Island government expect to run out of reserves of cash. It is these reserves which have kept the services going through all the years when the MOD have short paid on the tax bill handed to them. Past experience has shown the UK government does not always like the Overseas Territories building up cash reserves to pay for unforeseen emergencies, or even for the expected replacement of expensive and essential equipment. Remember what happened to the cash reserves earmarked for replacing generators at the power station in Rupert’s.

 

What has the UK general election got to do with Ascension Island? Governments do not like making difficult decisions as a general election approaches. In fact, the only decisions they do like making are those which are guaranteed to be popular with the voters. This has always been the case. School closures, hospital ward closures and other similar decisions are all put on hold until after the election. Other decisions which may be a bit awkward are also put on the shelf. St Helena’s airport is one of them. Hopefully it would embarrass the UK government too much to call off the project right now. If it is to be called off, then leave it to the next government. On the other hand, agreeing to build the airport could easily cause some awkwardness for UK ministers. Why are we spending £300 million on 4,000 people who live 4,400 miles away on an unheard of island? Why spend money on that island when we all know massive government spending cuts are on their way? These are the awkward questions voters could be asking UK ministers. Delaying a decision avoids them.

 

For the MOD to pay out £millions to Ascension in unpaid tax is also a tricky one. British soldiers have been fighting and dying in Afghanistan without some of the equipment needed for the job. In these circumstances, for a cash-strapped MOD to sign a cheque for a seven figure sum and hand it over to Ascension could easily invite more awkward questions from the UK voters. Right now, voters have become very important to the elected Members of Parliament. Leave these decisions until after the election. That’s the easiest thing to do. The fact that St Helena has more soldiers in the British Army per head of population than any other Commonwealth country, including the UK, does not cut any ice. UK voters don’t know much about St Helena and even less about its soldiers.

 

The UK may be happy for Ascension to spend all its cash reserves and then exist from year to year on tax revenues collected each year. There is also another possibility. We have heard some of the conclusions in a report on Ascension’s Two Boats school. It is clear the school could be run more efficiently and at less cost. What other government services on Ascension could be run using less money?

 

It could well end up that the shortfall in Ascension tax revenue is covered by ‘efficiency savings’. It is almost possible to hear the DfID team, who are on the Island now, putting this proposition to the Governor:

 

Step One – Let the Ascension Island Government use up its reserves of cash

Step Two – Send in a procession of consultants to find efficiency savings in AIG’s expenditure

Step Three – Tell AIG they don’t need the unpaid tax, just operate services more efficiently.

 

 

 

 

The above Article extracted from the St Helena Independent dated 15 January 2010