How Big Government robbed Turks and Caicos

There’s a mutiny in the Parliament of Turks and Caicos, the Caribbean island chain which owes allegiance to the UK as a British Overseas Territory.

Specifically, the United Kingdom, acting as interim government in the island chain since seizing control of its governance in 2009, is “forcing through” a value added tax despite protests by local business and government officials.

The new 11% VAT is scheduled to take effect in April, but local officials want its implementation delayed.

The word from London: no can do.

It started four years ago when the British government found what it called “systemic corruption”, just as the island chain’s Premiere was under investigation triggered by an American woman claiming he raped her.

The British put an immediate halt to Turks and Caicos’ self-governance, tossed out the Premiere, the cabinet, congress, and much of its constitution, and took over to “reform” the islands.

If it makes you feel good to believe everything the honest western government tells you when it’s on a power trip, so be it. What’s interesting, however, is that the British snuck in the new VAT just as they were wrapping up their takeover of Turks and Caicos before returning it to self-governance last year.

In the name of establishing a solid tax base to prevent future corruption, the UK government undermined the wishes of Turks and Caicos residents and chipped away at their ability to remain competitive.

The has become a soft authoritarian state with high taxes and – ironically – corruption of its own. Big bloated governments don’t like competition, and they’ll use whatever political capital they can to shut down those that threaten their plans.

Now, Britain is threatening to veto any action by local officials to delay implementation, which has relations between the two at a “boiling point”.

Officials have now resigned themselves to doing nothing, claiming it will have no effect as the UK’s heavy hand will just swat them down.

It’s clear to me this is a reversing of the progress we’ve made away from colonialism.

While Turks and Caicos are not entirely independent (they basically voted against that movement several decades ago), they’ve been given wide latitude to manage their own affairs. While the UK has a highly developed economy with significant influence in the world, places like Turks and Caicos need every advantage they can get.

The 31,000 residents there depend on strategic advantages like tourism and offshore banking, which could be hurt if the UK continues to wield its power against the will of the people there.

As the world changes, places like the US and the UK will have less power to continue shutting down government programs they don’t like in sovereign countries.

You may remember the US effectively put an end to all but two economic citizenship programs – including one in that third world dictatorship known as Ireland – fifteen years ago.

For now, the British government can’t be expected to leave well enough alone with its largely self-governing territories. For investors seeking to reduce risk from these types of hijinks, it may be prudent to avoid places with ties to greedy governments who don’t like competition.