From Urban Renewal 1.0 to 2.0 ...in the war against crime in The Bahamas

Urban Renewal Revamp 'An Error'

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

REVAMPING the original Urban Renewal was a “fatal error” in the fight against crime, Social Anthropologist and College of the Bahamas professor Dr Nicolette Bethel told The Tribune.

Her analysis of the country’s crime problem comes as tensions over the issue have escalated, with police officers this week expressing alarm at the murder rate.

Speaking with the Tribune, Dr Bethel said: “Urban Renewal 1.0 was an integrated, multifaceted programme that attempted to take a fundamentally different approach to solving the problems of the inner cities.

“That approach involved bringing government services to a single point in a community, to make it easier for the people who have the fewest resources to have access to the governmental services that they needed.

“The idea was that they could pay light bills and phone bills in the Urban Renewal centres, thus shifting the question of inconvenience on to the people providing the services rather than the people who are supposed to be receiving them.

“The idea was to rethink our approach to the inner cities — rather than seeing those areas and the people who live in them as ‘the ghetto’ and dismissing them, by recognising that not all people who live there are criminals and the law-abiding residents of those areas are on the front line of crime and are menaced by violent criminals long before anybody else is.

“Urban Renewal 1.0 was designed to give the law-abiding citizens real opportunities to gain access to social services and community policing worked on the premise that if you can gain the trust of the law-abiding citizens in a troubled area it becomes far easier to solve, deal with and ultimately prevent crime.

“And the programme was accompanied by some real efforts by psychological professionals to help to heal people who had suffered long-term abuse, brutalisation and so on.

“This core is what I considered revolutionary at the time, and which was removed when Urban Renewal was reformed because it was considered a waste of time and money, and a waste of policemen’s training too, as apparently police are supposed to fight crime, not prevent it.”

“By focusing so much on the criminals, we lose sight of the law-abiding citizens in the same communities, and it is a long time since we have really sought to serve them or meet their real needs.”

Dr Bethel added that the policing of inner city communities that arose after Urban Renewal 1.0 ended helped inspire distrust in inner city communities for authorities.

“Imagine if you were,” she said, “a 12 year old living in inner city Nassau in 2002 and in 2003 all of a sudden police are put into your community and they’re not violent or menacing, they are friendly, father figures who are teaching you music. They are walking around, learning your names and so on and for five years you get to know them.

“Then, when you are 17, they are taken away, and the only replacement are police with guns. How are you ever going to trust your country again? That’s what I think part of the root of this particular kind of violence is.”

What replaced Urban Renewal 1.0 was an idea that urban communities are war zones which are entered by policemen, sometimes in riot gear, brandishing guns and threatening residents, she said.

“I have heard first-hand of the experiences of people who, having the misfortune to live in an area where a crime has been committed and the police are in pursuit of a criminal, have themselves been threatened by those police. One family had their dog shot in front of them, simply because the dog barked at police who were running through the yard in pursuit of a perpetrator.

“I cannot see that as something that would have been likely to happen under Urban Renewal 1.0, and I cannot really blame people who have had that happen to them from mistrusting the police and seeking to fend for themselves.”

She added: “The Urban Renewal programme and community policing programme of the early 2000s are things that could have made a difference. It reached into the communities using tactics not being employed under Urban Renewal 2.0, tactics that were important because there is a huge part of the community that does not feel it is a part of the Bahamian society, a part that does not feel there is a place for them so they make a place for themselves.

“Urban Renewal 1.0 also helped deal with the problem of guns by gaining the trust of people which eventually led police to the guns. That trust is now gone.

“With Urban Renewal 2.0, you have no one dealing with people in an intimate way, just people dealing with houses and the like. I have not found anything reasonable for why people thought Urban Renewal 1.0 wouldn’t work in the long run.

“With 2.0, they took the healing part out of it and they can’t put it back in. You’re not going to get those people back because you have to rebuild trust in the inner city community and that will take time. In 2002 there was hope; in 2014 there is no hope.”

As for criticism of Urban Renewal 1.0, which she said was considered a “waste of time” by many, Dr Bethel said the perceptions that the programme failed could “at least be challenged” since the country’s crime spikes began in 2007, after Urban Renewal 1.0 ended.

Tracing the origins of the country’s crime problems, Dr Bethel said a failure to deal with the then burgeoning gang and drug culture of the 1980s is partly responsible.

She said: “I think this upswing in crime is linked to the gang and drug culture that started in the late 80s; but we knew it was an issue back then, it’s just something we never dealt with. Concepts, issues and ideas were put in place to deal with it but they were resisted.

“At the end of the 80s, one of the responses to the rise in gang culture was a mandatory National Service system for young people. It was vigorously resisted from the then opposition and those who supported them, so for the whole of the 90s we did not deal with the youth gang issue, possibly because the change in government brought about better times; Atlantis came, the economy grew, things were great – but the prosperity did not solve structural issues.

“They just gave people opportunity to do something other than rely on the gangs.

“Now, today, I’m not even sure a National Service programme would work if reintroduced. They missed the opportunity.”

“While there was resistance to the proposed National Service in the 1980s when it was set up as a military programme, the resistance continued even after it was reformulated to be a programme of real service. Perhaps the sticking point was that it was to be mandatory, and many of the more privileged members of the society did not think that their children needed to be included in the programme.

“However, once again, I think the idea was a radical one which might have brought about a little more social cohesion. But who knows?

“Another thing we have done,” she added, “we sent a message that our young people are not worth protecting when we took police out of the schools.

“Too many things are done in our society without understanding the consequences of them or what perception they will create. I don’t think police need to be in the school all the time, but I do think students need to feel safe.

“When we took the police out of the schools we put them on Bay Street to protect the tourists. People are not blind and they got the message loud and clear. The safety of our children is less important than the safety of our visitors. Message received.”

Finally, Dr Bethel said the recent crime problems are unlikely to keep on escalating and called for a reform of the justice system,.

“Crime and violent crime rarely escalate and escalate,” she said. “I think this is a spike. In terms of the response in the short run, I think there needs to be a show of law and an imposition of consequences in a very judicious kind of way.

“Opening the courts will be great, putting police on 12 hour shifts will help clamp down on criminal activity yes, but those are not long term solutions.

“We have a group of men that have learned to fend for themselves because they don’t trust anyone else. They have learned to respond brutally.

“Let’s say you arrest them, rush them through the 10 new courts, then what? Fox Hill Prison cannot accommodate the needs that we have.

“Secondly, I’m not sure the justice system is at all just, not in terms of corruption, but that the people who tend to have the most access to all the options our justice system allows, like bail and appeal, tend to be the people that have committed the most serious crimes.

“The people that have committed the least crimes tend to wait the longest because we a trying to rush the hard criminals through.

“The justice system is not fair to the hapless kid arrested for having marijuana or for stealing somebody’s bicycle. They are the ones waiting on remand for their trial to come up for years in the same prison we put the hard criminals in.

“We need to deal with this. We need to be making the system work and the system just, make it serve the perpetrators, the victims and those that are in between.

“That’s something we need to think about, how we tweak, adjust and reform our justice system.

“In addition, we fall in the habit of de-humanising the perpetrators of these crimes. We need to make it a point to say we are all human and all citizens deserve the same attention.

“And we can’t be changing our minds whenever our government changes; we have to come to some consensus as a society on how to deal with crime,” she said.

January 08, 2014

Tribune 242

The centuries-long march to majority rule in The Bahamas

The march to majority rule, pt. 1

Consider This...

By PHILIP C. GALANIS

The journey was very long and fraught with many dangers, trials, abuses, separations, rebellions, revolts, violence, frustrations, successes and, yes, even deaths. – George A Smith

The march to majority rule in The Bahamas can be characterized by two words: sustained struggle.

On Friday, January 10, we will celebrate the first public holiday to commemorate the day that majority rule came to The Bahamas on that date in 1967.  It was a life-changing event that catapulted the lives of many thousands to unimaginable heights.  Therefore this week and during the month of January, we would like to Consider This… what were some of the milestones along the way on the centuries-long march to majority rule?

Although it is difficult to capture all the important landmarks on the march to majority rule in a single column, and while we acknowledge that there are many unsung heroes of the movement, we want to highlight several important events that should be remembered as creating the framework for the achievement of majority rule as we approach this public holiday.

Early days and accelerated population

When Christopher Columbus and other European explorers first discovered these islands beginning in 1492, they met Lucayans, Arawak-speaking Amerindians who arrived in The Bahamas between 500 AD and 600 AD, originating in the South American mainland, having first settled in Cuba and Hispaniola.

For the next few centuries after Columbus’ arrival, Europeans, Americans and those who lived in our islands developed significant trading relationships.  When the Loyalists, those individuals who remained loyal to the English Crown during the American Revolution and became refugees in search of a home when the Crown lost to the rebels, fled the new United States, upwards of 5,000 people, including Loyalists and their many slaves, settled in the Bahama Islands, bringing their ideals with them.  It was with their arrival that the infamous trade in human cargo – the trans-Atlantic slave trade – reached its zenith here.  As was the case in North America and the Caribbean, African slaves were brought to market at Vendue House in downtown Nassau and were subjected to the same inhumane abuses that were experienced wherever the trade flourished.

In these islands, slavery came to be recognized as a perversion, and consequently, there were many instances, both recorded and not, that demonstrated the sustained struggle against this perversion and inculcated a determination to achieve equality in Bahamians.  This week, we will review a few instances of different kinds of early rebellion against conditions of servitude that marked the struggle and shaped the Bahamian psyche as it continued to yearn for total freedom.

Uprising at Farquharson’s Plantation

Charles Farquharson owned a prosperous plantation on San Salvador, growing a variety of crops including cotton.  He is particularly remarkable in Bahamian history as his journal was preserved and, through it, we have perhaps the only look at the everyday life of a Bahamian plantation owner and his slaves.  The journal also affords us the bare outlines of an incident on the Farquharson plantation in early 1832 that amounted to an uprising against the brutality of James, a mulatto son of the owner, who was left in charge while Farquharson was in Nassau.

It was when James decided to resort to physical punishment yet again over a minor incident that Farquharson’s chief driver, Alick, took exception to this habitual brutality and struck back, hitting young Farquharson with a heavy cudgel before he was dragged off by the other slaves who immediately gathered around the fray in a threatening manner.

Although no more violence is reported, Charles Farquharson faced great opposition as he tried to reason with his slaves the following morning.  Unfortunately, when three of the ringleaders were sent to Nassau for trial the following March, more violence was threatened by the Farquharson slaves.  Finally, after time spent at hard labor in the Nassau workhouse, all except Alick were returned to San Salvador.  Alick, for his crime of not tolerating abuse, was ordered sold and never saw San Salvador again.

Pompey

A few years before the Farquharson plantation unrest, there was the legendary slave revolt in Exuma led by Pompey.  It was early 1830 and, with only three days notice, a group of 77 of Lord Rolle’s slaves were told they were to be sent to Cat Island.  No husbands or wives or any children under 14 were to be separated but they were only given one weekend to pick their pea and bean crops, thrash their corn and dispose of their livestock.  Moreover, they would have to abandon fields of Indian corn that had just been planted.

With 32-year-old slave Pompey leading them, most of the slaves involved hid in the bush for five weeks until their provisions ran out.  It was at that point that 44 of them, representing nine families and three single slaves, stole Lord Rolle’s salt boat and sailed it to Nassau in an effort to personally put their case in front of the governor, Sir James Carmichael Smyth.

Sadly, the slaves were taken into custody and thrown into the workhouse before seeing the governor.  The adult slaves were tried immediately as runaways and most of them, including five women – two of whom were nursing babies – were sentenced to be flogged.

Although he had not been kept apprised of the events surrounding this case, when the governor, known for his sympathy towards slaves, found out, he was furious, immediately firing the police magistrate and the two justices of the peace involved in the case.  He also ordered Pompey and his group of rebels to be taken back to Exuma.

When they arrived back at Steventon, they were joyously hailed as heroes and subsequently all the other slaves refused to work.  This behavior alarmed those in authority over them so they called for military reinforcements from Nassau, telling the governor that an armed slave insurrection was imminent.  Fifty soldiers and the chief constable of The Bahamas landed in Exuma during the night of June 20, 1830.  The slaves were quiet but not prepared to go to work, saying that they had understood they were to be made free.  After a thorough search of the slave houses, the soldiers only found 25 old muskets and very small amounts of powder and shot, putting the idea of an armed insurrection to rest.

However, the soldiers were still worried and decided to march to Rolleville, another slave village, to search there.  Pompey knew a short-cut and reached Rolleville before the soldiers, warning the slaves there who hid in the bush.  Although only three muskets were found in Rolleville, Pompey was captured and taken back to Steventon where his public punishment of 39 lashes persuaded the slaves to go back to work.

Most of the soldiers returned to Nassau and Lord Rolle’s slaves were reportedly left “quiet and industrious” by the chief constable.  But Pompey’s rebellion was really the first time that Bahamian slaves had resisted a transfer and succeeded, establishing that Bahamian slaves could not be moved without their consent, a major achievement in beginning to establish that slaves were people who had civil rights.  The protest that arose when the flogging of the women became known throughout abolitionist circles gave great impetus to legislation, including the bill that granted full emancipation that would finally occur four years later.

Next week in part two of this series, we will look at how some 20th century events continued the march to majority rule, preparing even more Bahamians for the struggle that was begun by Alick and Pompey as they bravely stood up for their rights so long ago.

 

• Philip C. Galanis is the managing partner of HLB Galanis & Co., Chartered Accountants, Forensic & Litigation Support Services.  He served 15 years in Parliament.  Please send your comments to pgalanis@gmail.com.

January 06, 2014

thenassauguardian

- The March to Majority Rule, Part 2>>>

- The March to Majority Rule, Part 3>>>

- The March to Majority Rule, Part 4>>>

From Ignorance and Want to Wisdom and Means

By Dennis Dames:

The Ghost of Christmas Present opened his robe to reveal two haggard, ashen, corpse-like children to Ebenezer Scrooge; and he said, “Look upon these”.  Ebenezer Scrooge, stupefied with horror - asked, “What are these?”    The Ghost of Christmas Present replied, “They are your children! They are the children of all who walk the earth unseen! Their names are Ignorance and Want! Beware of them! For upon their brow is written the word "doom!" They spell the downfall of you and all who deny their existence!”

I was moved by the aforementioned exchange after watching A Christmas Carol recently.  “Ignorance and Want” are our children, of whose existence we are denying; that’s why we are in the doomful position today in our nation – in my view.  As we continue to walk the earth unseen, our downfall draws nearer.

The Bahamas has been a factory for “Ignorance and Want” for a few decades now, and the harvest is beginning to manifest itself.  Our collapse is imminent if we do not turn things around quickly.

Let us all therefore, be seen in 2014 and beyond; doing meaningful and productive things for our children and country.  It’s the only way that we could transform “Ignorance and Want” into “Wisdom and Means”.  Our children will honor and cherish us for it.

Caribbean Blog International

Ramp-up campaign against value-added tax (VAT) in 2014

Anti-VAT group plans to ‘go grassroots’ in 2014

SCIESKA ADDERLEY
Guardian Business Reporter
scieska@nasguard.com

Come 2014, a local advocacy group plans to ramp up its campaign against value-added tax (VAT).

Since creating Citizens for a Better Bahamas last month, its founder, Tamara Van Breugel, revealed to Guardian Business that its following is growing, with more than 1,500 contacts on its Facebook page to date.  But plans to mobilize the campaign to the streets is set begin in January, beginning with grassroots communities.

She said it is all in an effort to bring awareness to Bahamians everywhere so they can be informed about this issue that will impact the country’s economy.

“It’s been really encouraging because for the most part, we have been focusing on the social media part of our campaign,” she said.

“But we have been getting a lot of positive responses throughout the community so far and I think that a lot of people are concerned about VAT.

“We’re looking to get into grassroots communities, letting young people, and people that aren’t usually in contact with media, access this information so that they can have an awareness of what’s going on.”

In its push for a unified, engaged and informed citizenry, Van Bruegel said VAT would not be the only issue that the group will discuss, although it was the catalyst for starting the group.  Citizens for a Better Bahamas has also started a petition that has been directed to parliamentarians, so that constituents can voice their concerns on the matter.

“We believe that’s the missing component in the government’s structure and that’s the key to creating good governance,” she said to Guardian Business.

“We do have a petition that is directed to each of the 38 members of Parliament.  That is a part of our on-the-ground campaign, getting people aware of the petition and then to sign it.  This is so they can have meaningful dialogue with their elected members.”

Citizens for a Better Bahamas is a non-partisan advocacy group.

The government has proposed to implement a general VAT rate of 15 percent on July 1, 2014 while the hotel sector will be subject to a lower rate of 10 percent.

Officials at the Ministry of Finance estimate that VAT can generate approximately $200 million in revenue in the first year alone, which the government has suggested is key to reducing national debt levels.

Deember 30, 2013

thenassauguardian

Caribbean Blog International

Bahamians must all stand together and let our government know that Value Added Tax (VAT) is not for us

 Your Say: Vat Is Not The Solution

By TIMOTHY ROBERTS


MY name is Tim. I am a 40-year-old graphic designer on the Island of Abaco and a citizen of the Commonwealth of the Bahamas.

I believe the Bahamas is indeed in need of tax reform; in fact we are likely more than overdue. Import duties have long been an inefficient model for the country due in large part to how easily and often they are circumvented and go unpaid.

However, the solution is not a Value Added Tax (VAT).

Based on the current information available, VAT will most certainly lead to a significant rise in the cost of living – something that is already relatively high – as it will lead to substantially higher cost of services.

These will in turn trickle down to the consumer.

The net result of increases in costs to consumers will lead to a contraction of the economy and ultimately a reduction of revenue to the Public Treasury.

The fallout of this will lead to businesses laying off persons to reduce expenditures as they hope to break even.

Before, however, we even have a conversation on raising taxes we must first reduce spending.

Any human being on earth, if they spend more money than they make, will find themselves in debt.

Anyone who seeks to borrow must ensure that they have the means on their own to pay such a loan back without bringing unnecessary hardship on themselves or their dependents.

The government has not taken the known fiscally prudent path but insists in overspending (much of which is in fact wasteful spending) after which they unconscionably turn to the citizens to pay back by taxing them even more.

We must have a fiscally prudent government before they start adding more or higher taxes or a different tax.

In implementing the Central Revenue Agency (CRA) they will spend countless millions building, outfitting and employing yet more people in turn eating away at the potential revenue the government will collect from VAT. All the while still employing hundreds of Customs officers.

The government must become more diligent – much more diligent – at collecting taxes.

The nation suffers when the necessary revenue is not collected and successive governments have chosen to borrow money instead of raise capital through the proper collection of taxes.

On the way to achieving fiscal prudence, it will be of great importance to implement a Freedom of Information Act and a Public Disclosures Act by which We The People can hold the government accountable.

We, as a nation, also must do our part. We must hold the government accountable while ourselves doing our reasonable part by paying our taxes, levies and fees. When we don’t do our part it hurts the entire country.

Today we are on the precipice of a perilous economic future and VAT is not the means to a more prosperous tomorrow for the Bahamas. We must all stand together and let the government – our government – know that VAT is not for us.

I believe together we are better. And together we can build a Better Bahamas.

December 12, 2013

Tribune 242 

Caribbean Blog International

Value Added Tax (VAT) could hardly be effectively administered in The Bahamas ...because the country has a maladministered tax collection system

Young Man's View: Vat Roll-Out Will Be A Mess

By ADRIAN GIBSON

ajbahama@hotmail.com

THE rollout of the new Value Added Tax regime is seemingly setting up to become an unholy mess! In this the second part of my VAT series, I spoke to a former Canadian tax attorney—now resident in the Bahamas—and a noted accountant who, whilst providing a general overview, asked me to allow him time to meet with a committee of the Bahamas Institute of Chartered Accountants to not only discuss the draft legislation, but to also look at the accounting and administrative aspects of VAT before we continue our discussion in the next week or so.

My ex-pat source is a Canadian Chartered Accountant and tax lawyer who moved to The Bahamas in the late 90’s. The specialist outlook on VAT emanates from the fact that he practised tax law when the Canadian Federal government enacted the GST (Goods and Services Tax) and the Quebec government enacted the QST (Quebec Sales Tax).

According to my source—he wishes to remain anonymous—VAT could hardly be effectively administered in the Bahamas because the country has a maladministered tax collection system.

Available data about the Canadian Goods and Services Tax (GST)—that jurisdiction’s Value Added Tax—shows that that country’s Federal Government launched it in 1991. At the outset, the VAT was introduced at a rate of 7 per cent and subsequently reduced to 5 per cent (where it currently stands). What’s more, Canadian VAT isn’t readily noticeable in advertised prices, as the tax is only appended to one’s purchases upon the calculation of a consumer’s payment, for example, if one buys a cell phone for the sale price of $200 only to have an additional five per cent or $10 added at the cash register.

That said, here in the Bahamas VAT we have decided to jump the gun and implement VAT—from the very beginning—at a whopping 15 per cent. That seems a bit absurd. Three or five per cent—or even seven per cent—would’ve seemed more reasonable and been more palatable, but 15 per cent seems ludicrous!

According to my Canadian source:

“Canada has a sophisticated tax system. It began with income war tax and was meant to be a temporary measure to finance Canadian war efforts in the World War. However, it is still in place today and served as the foundation for the current form of income tax.”

“In Canada, people must have books and records, which can be audited. All residents of Canada must declare income and expenses and pay taxes on their net taxable income. The ultimate VAT tax is on the ultimate consumer and that is the person at the end of the chain,” he said.

He went on: “The Bahamas is currently incapable of collecting the easiest tax in the world—property tax! There’s no country in the world that’s incapable of doing that. All the state has to do is bring a lien against the property and put it up for sale. It’s a no brainer! The government wants to impose a VAT in a country that is not used to paying such taxes and whilst the country itself predominantly operates on a cash based system.”

Frankly, my expat contact is right! Considering the fact that the Bahamas is only now moving away from the cash basis of accounting—per the Public Administration Act—to an accrual basis (meaning one must record what’s earned, what’s owed/accounts receivables and the expenses incurred). Oh, did I also say that Bahamian business persons—as is done in Canada and many other jurisdictions—would have to pay VAT on accounts receivables even if they haven’t collected the monies at that time (as long as it’s recorded)?

Frankly, the tax lawyer told me: “Everyone will pay cash here in the Bahamas! The whole concept of instituting VAT in the Bahamas is convoluted. It has not been established who will be trained or hired to audit the book and records of all the businesses that will claim tax credits? Who will make a determination as to whether the returns or statements that one is paying is true? Who is going to conduct an audit to properly determine if one is entitled to a tax credit? How many businesses are sophisticated enough to handle books and records?”

As it stands, my understanding is that the threshold for a business being exempted from paying VAT is $100,000. But, frankly, what stops a Bahamian business person from subdividing their companies, all to duck exceeding this threshold? Is the government going to pass legislation addressing the concept of associated companies, similar to what has been done in the United States and Canada to prevent tax fraud? In the US, if—for example—a corporation is seeking to attain a lower tax rate on its first $200,000 of corporate income, as the company approaches the $200,000 threshold its principals could simply incorporate another. In the US and Canada, if it’s found that two or more companies have similar principals or that they have been incorporated to avoid taxes, they are considered to form one pool and found to be related. So, what stops Bahamians from breaking up their companies and doing the same to avoid VAT?

Quite honestly, as it relates to VAT, I don’t believe that our national behaviour—as it concerns paying taxes and tax collections—is at a level to foster the sort of compliance that is absolutely necessary for the implementation of VAT in another few months. The effective implementation of VAT would largely depend on a culture of ethics and compliance. And, honestly, there’s not enough advance time to put in the measures, and all the other requisite aspects of a tax structure, to ensure compliance!

According to noted Certified Public Accountant Reece Chipman, “the whole VAT system—along with FATCA requirements—will be pulling money away from our economic base, along with the pressures of the OECD. It’s going to be a case of separating the sheep from the goat, the haves from the have-nots. It’s going to hit you personally and it’s going to hit you in an economic capacity, in the way we think, buy and consume. When one looks at all that is happening collectively, it’s hard. If it were happening individually, there might be room for adjustment (referring to FATCA, etc, coupled with VAT).”

So, will the ultimate responsibility for the collection of VAT fall on the Ministry of Finance or will the government pass legislation to establish a Central Revenue Agency (CRA)? If such a body is created by policy/regulation—as opposed to legislation—Mr Chipman believes that “when one thinks about compliance and penalties, it wouldn’t have that level of authority.”

According to Mr Chipman, the consumer will find themselves paying the 15 per cent whilst most “businesses will be acting as agents for the government, collecting and sending money to the government.”

“The question is, if a business is not a registered VAT agent, such a business shouldn’t be charging a consumer 15 per cent. If one doesn’t want to pay VAT, they would simply buy from those persons who are not VAT registrants, for example, Super Value could potentially get hurt as persons would shop at smaller petty shops that are exempt. There are avenues that consumers—within a household—can look at in terms of savings. My family and I will probably go and sit down and figure out how to shop, to find where we can get the most bang for our buck and if that means at the smaller convenience stores or shopping in bulk, then that’s the approach we would have to take,” Chipman said.

He went on: “We’re still on a cash based system and in cash based societies, people generally look at things to be avoided. What if stores decide to have two cash registers, one for adding up purchases for which VAT is applied and one for purchases that reflect no VAT. In Jamaica, you hear of issues of non-compliance all the time. People are looking for ways to legitimately avoid the process and one realizes that 15 per cent is no small amount. If VAT is introduced at 15 per cent, even in accounting, if I charged $10,000 before, I would now have to charge $11,500 and that higher cost could put me at a disadvantage when compared to accountants in other jurisdictions.”

So, will a Central Revenue Agency (CRA) be tied to the Registrar General Department and Business Licensing in order to detect those persons who establish multiple companies for the purpose of avoiding taxes? What are the penalties proposed for such persons?

How would a CRA be constituted? Would it be composed of accountants, auditors, outside consultants, who?

I look forward to hearing the debate of the draft VAT legislation in January!

Tribune 242 

The Ministry of Finance Releases the Inter-American Development Bank (IDB) Study on the Economic and Social Impacts of value added tax (VAT) in The Bahamas

Bahamas.gov:


For the IDB's Study on the Economic and Social Impacts of VAT in The Bahamas click here.


This is a highly technical research, fully calibrated to the local circumstances and based on a complete representation of the Bahamian economy. For reference, the study presents the impacts of alternative rates for the VAT in combination with corresponding, alternative compensating cuts in customs tariffs and excise rates. This includes the structure set out in the draft legislation, with a standard VAT rate of 15% and a rate of 10% for hotel accommodations and food and beverage sales in hotels.

The study predicts that the introduction of VAT, alongside other reforms to reduce the public debt, would have positive economic and fiscal benefits. These returns would be magnified further, if accompanied by a temporary but well targeted increase in public spending on programs to assist the poor and vulnerable in society, as the government already intends to do.

There are no significant short-term negative outcomes that are expected from the introduction of a VAT. Domestic economic activity would remain essentially unchanged from its present uptrend. However, the pace of economic activity is forecasted to strengthen steadily thereafter in comparison to the status quo.

A VAT at 15 percent corresponds to the most ambitious upfront rebalancing of the tax base. At this rate, over a decade, the size of the economy could be some 10 percent larger, than in the case where reforms were not forthcoming. Such dynamic gains would predictably also occur but to a lesser degree with a more tempered rebalancing of the tax base.

The IDB’s results are consistent with expectations for the type of fiscal reform package that is being considered for The Bahamas. Reducing distortionary taxes on business activities, and placing more direct emphasis on consumption taxes, would stimulate a projected increase national savings and investments. The private sector investment climate would also benefit from expanded access to financing that would no longer be needed to fund government deficits. These are forecasted to contribute to a stronger growth potential and reduced unemployment, which would be felt across all broad sectors of the economy.

The inflationary impact of tax reform is projected to be modest. At 15 percent the VAT rate would lead to a forecasted overall inflation rate that would be 3 to 4 percentage points higher than otherwise in the first year.

The prediction for inflation is consistent with the design of the Bahamas’ tax reform proposal. The impact of VAT would be cushioned by significant reductions in custom tariffs and excise rates, and would also feature exemptions for key areas of consumption.

After the first year of VAT, Bahamians should expect to see beneficial effects on the cost of living as a result of the tax reform package. In particular, after a few years cost of living is expected to be lower than in the absence of fiscal reforms. This is because the government through its deficit spending is a significant contributor to price increases, and such pressures are forecasted to subside.

On December 9, the IDB will host a one day, technical seminar on the economic model. The seminar participants will include economists and researchers from the Ministry of Finance, the Department of Statistics, the Central Bank and Bahamas Chamber of Commerce and Employers’ Confederation. Afterwards, there will be a handover of the model to a Bahamian technical group so that additional economic simulations can be carried out if desired. More in-depth training on the model is planned for January 2014.

December 06, 2013
Bahamas.gov

For the IDB's Study on the Economic and Social Impacts of VAT in The Bahamas click here.