Reference has been made in the Media that unless Legislation is changed taxation of up to 27% would be applied to interest on depositors funds in the Bank of St Helena.

To date sixteen Legislative changes have been identified and these will be dealt with by amendment legislation.

In order to put depositor’s minds at ease the following clarification has been issued by the Financial Secretary. Neither the Collector of Taxes nor the Executive Council has any intention of taxing interest on depositors funds in the foreseeable future.

A categoric assurance is given that no taxation in this area will apply for the period up to 31^st March 2005.

Thereafter the position will be reviewed annually.

Government’s established male employees who have been paying into the Widows and Children’s Pension Scheme are being refunded. Retired Officers who paid into the scheme have the option of being refunded or they could leave their contributions in the Scheme.

The Finance Department has informed those persons concerned that their refund is to be taxed. The reason is because in previous years, when this money was being deducted from their salaries, it was not taxed. This meant that, for example, a Level 5 female officer would have been taxed on all of her taxable income, but a Level 5 male officer would not have been taxed on his contribution to the Widows and Children’s Pension Scheme so his tax would have been lower.

Since the established male employees are now being refunded, they are being taxed on this money as they would have been taxed on it in previous years if it had not been deducted from their salary for the Widows and Children’s Pension Scheme.

Some males will be taxed at 17% and others at 27% depending on whether or not the refund pushes their salary up into the 27% bracket. The refund is being taxed at current tax rates since the Income Tax Ordinance states that the taxable income of a person in any year of assessment shall be the total amount of his income earned, accrued, derived or received in St Helena in that year of assessment.

The Finance Department is refunding what is owed to people this month. People have been given the option of having their refunds paid in cash, or for it to be placed into their bank accounts.

12 November 2003

Banking Consultant Alan Savery will be returning to St Helena on 22 September to work on matters relating to the Bank. He will remain on Island until 7 October.

Bank Manager Richard Winch said that Alan’s visit is timed to coincide with the proposed introduction of the new Banking Legislation. This proposed legislation is to be discussed at the next sitting of Legislative Council which is due to commence on 23 September at the Court House in Jamestown.

The proposed legislation provides for the St Helena Government Savings Bank to be wound up and for the Bank of St Helena to be created, operating as a commercial entity. A Board of Directors will be formed to make decisions relating to the bank and Richard explained that the Banking Consultant will be working "with the Financial Secretary in respect of the appointment of the Competent Authority which will regulate the banking business on the Island, as well as discussing the appointments and role of the Board of Directors which will run the new banking entity". Richard said that this Competent Authority will be based on St Helena and could comprise of two or three members.

While on Island, Alan will also work with the Bank Manager to discuss policy matters and operational issues in connection with the Savings Bank. He was last on St Helena a year ago when he was looking into the possibility of having commercial banking on St Helena.