Two years later ...we seek to objectively assess how the Progressive Liberal Party (PLP) government has performed ...provide a prognosis on the rest of the administration’s term ...and offer some recommendations on the way forward

PLP governance: Two years in

In a couple of hours from now, the Progressive Liberal Party (PLP) will commemorate two years since the general elections that ushered the party into power.  The PLP won the 2012 general election in a landslide victory over the incumbent Free National Movement (FNM) government, after what was generally considered to be a remarkable election campaign.

The PLP came into power in the aftermath of the Great Recession and was confronted with challenges of great proportions.  There was no doubt that the expectations of the electorate in relation to the new government were high and there was an urgent need for relief, which the PLP promised during its campaign for office.  As a result of the state of the economy and the myriad issues the new government was expected to address, the PLP government did not have the luxury of a honeymoon.

Simply put, the Bahamian people wanted solutions and demanded an immediate change in circumstances.  Two years later we seek to objectively assess how the government has performed, provide a prognosis on the rest of the administration’s term and offer some recommendations on the way forward.

The Charter for Governance

The PLP deviated from the orthodox format of manifestos which outline the agenda of a political party during its term in office.  Upon the release of the Charter for Governance (Charter), the PLP noted that the document, termed Vision 2030, was designed to be a road map to go beyond the guaranteed five-year tenure in our political system.

While some might consider this to be presumptuous, the PLP articulated its belief that the nation’s development could not be planned five years at a time.  The reality remains that the proposals and initiatives documented in the charter are so numerous and significant that it is unreasonable to expect them to be actualized in full within five years in the democracy that we practice without radical and/or autocratic decisions.

It is appropriate for the populace who are the employers to review and assess the government – the employees – based on the representations made in their plan as contained in the charter, although it is unclear how specific goals will be selected for examination.  Subsequently, it is up to the Bahamian public to grade the government during and at the end of its current term in office to ascertain whether the mandate should be renewed.

A consensus building government

Prime Minister Perry G. Christie has been consistent in his approach to governance.  Christie could very well be regarded as the great consensus builder based on his inclination to practice inclusive politics.  He is known for seeking to involve the citizenry in the decision-making process of governance.  There are commentators that oppose this approach with criticisms on its impact on the speed of decision making and surmising such as a sign of indecisiveness or weakness.

The late Baroness Margaret Thatcher, who was not deemed to be a proponent of consensus building, had the following to say on this topic; she noted that consensus is “The process of abandoning all beliefs, principles, values and policies in search of something in which no one believes, but to which no one objects; the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead.  What great cause would have been fought and won under the banner ‘I stand for consensus’?”  This mind-set was perhaps one of the greatest criticisms of her leadership and is believed to have contributed to her political demise.

Nevertheless, leaders have differing philosophies and styles; hence, no one approach could be regarded as being superior to the other.  The government must continue to collaborate with the people and relevant stakeholders in order to ensure continuous engagement and involvement in matters of national interest.  However, where such consensus building will contradict the beliefs, principles, values and policies of the government, our leaders must be prepared to proceed with their agenda in spite of opposition as long as the decisions are in the national interest.

The highs of the first two years

In order to fairly assess the first two years of the current administration, one must refer to the content of the PLP’s charter, which should govern the government’s policies and agenda during its term in office.  It is fair to state that the government has had some high moments during its first two years, including in no particular order: Budget 2013/2014, which was praised by international observers and rating agencies; the establishment of the National Training Agency; the establishment of the Bahamas Agricultural and Marine Science Institute; making deliberate efforts to reduce the cost of electricity; engaging in active negotiations to remedy the BTC/Lime deal; the development of a fiscal consolidation plan and commencement of the tax reform process that included the release of a white paper, the implementation of the Central Revenue Agency and a Real Property Tax Amnesty program that nets much millions into the government’s coffers.

The Bimini economy has benefited significantly from foreign direct investment and the opening of the Resorts World Bimini project, while Grand Bahama has also seen a boost in its economy as a result of Memories Grand Bahama Beach and Casino Resort.  The Royal Bahamas Defence Force (RBDF) is also set to gain from the procurement of the necessary vessels and equipment to increase its efficiency in securing our borders and stemming the scourge of illegal immigration and poaching.

Past and present challenges

As promised in its charter and the manifestos of other political organizations, the government held a non-binding referendum on the establishment and regulation of a national lottery and web shop gaming.  While it remains to be seen how the government will bring closure to this matter, this administration will be remembered for having the courage to address an issue ignored for decades by successive administrations.

Gender equality remains an important national matter that ought to have been addressed a long time ago.  The government commissioned a Constitutional Review Committee which provided its report on proposed changes to our constitution.  However, the first of the proposed changes, which seeks to provide Bahamian women with the same rights as their male counterparts, is yet to take effect due to the delay in the requisite constitutional referendum.

The pandemic of crime continues to be a major challenge for the government by its own admission and as evidenced by the level of lawlessness in our society.  The other issues relating to the detention center and the level of union activism over this period has indeed presented challenges to the government.  When combined with the sluggish global and local economic growth, as well as the declining yet still high rate of unemployment in The Bahamas, it would not be an understatement to state that this PLP administration has its plate full.

Going forward

Artists often highlight the beauty of a plain canvas that many may not view in the same light.  A plain canvas presents a unique opportunity to start something unique and create a special piece.  In other words, whether the plain canvas is new or wiped clean the opportunity remains available to do something great and exceptional.

The government need not dwell on any of its accomplishments or get side-tracked by distractions and challenges of the last two years.  Rather, it must embrace the gift of a new day to accomplish its goals and objectives.  The government should wipe its slate clean - if it must - and focus on its agenda as documented in the charter.

While it may be argued that time is of the essence (and it sure is) and is running out, there remains ample time for the government to make the necessary changes to put The Bahamas in better standing for greater success.  In the words of the “Oracle of Omaha” – Warren Buffett: “Someone sits in the shade today because someone planted a tree a long time ago.”  The government must be resolute in ensuring that the necessary trees are planted and the requisite foundations are laid today to protect, shield and preserve the future of generations yet unborn.

• Arinthia S. Komolafe is an attorney-at-law. Comments on this article can be directed to a.s.komolafe510@gmail.com.

May 06, 2014

thenassauguardian

Despite having sort-of decriminalised same-sex intercourse ...the government has not moved to cement legal protections for the equal treatment of members of the Lesbian, Gay, Bisexual and Transgender (LGBT) community in The Bahamas

Lgbt Community: Too Tiny To Count?

 

The Bahamas government declined all recommendations concerning LGBT rights

 

 

By AVA TURNQUEST

aturnquest@tribunemedia.net

“Like I’ve said before, I don’t know of any person who is gay in this country who doesn’t have the same rights as I do. And so for you or anyone to say that that’s discriminating and such, I don’t know. Someone has to prove it to me.”

– Rev Dr Randford Patterson, Bahamas Christian Council president.

THIS is the second time in my life that I’ve agreed with the Bahamas Christian Council on an issue. Our first mutual agreement came earlier in our conversation when Rev Patterson said that Bahamians were too passive. Try not to be too shocked, times are changing. As the vocal religious community shouts at an even smaller yet silent advocacy grouping, has anyone ever bothered to ask the Bahamian people how they feel?

Despite having sort-of decriminalised same-sex intercourse, the government has not moved to cement legal protections for the equal treatment of members of the Lesbian, Gay, Bisexual and Transgender (LGBT) community. Which begs the question of why the political strength to alter laws fell short of enacting supporting policy?

In the United Nations Human Rights Council’s Universal Period Review last year, New Zealand, Norway, the United Kingdom, Northern Ireland, France, Uruguay and Argentina asked The Bahamas to consider measures to promote non-discrimination and tolerance regarding sexual orientation. In particular Uruguay noted that Bahamas law contained certain legal loopholes that “generated discrimination” against the LGBT community.

Perhaps it was the Sexual Offences Act, where the age of consent differs for same-sex acts between consenting individuals by two years, that left countries unconvinced that the government had necessary protections to protect human rights. Or perhaps the reference to “in a public place” with regard to same-sex?

Nevertheless, The Bahamas government declined all recommendations concerning LGBT rights.

The government’s position on the issue of LGBT “rights” is tangled. On one hand there is a strong stance on the protection of tourists and the tourism economy, from the product of state-sanctioned homophobia; and on the other there is a near total denial of sexual orientation discrimination in the local and national context.

Despite highlighting at every opportunity that his political career has suffered because of his marked support of LGBT rights Foreign Affairs Minister Fred Mitchell recently attempted to stratify discrimination. Apparently, there can be social, religious, and official discrimination – all coexisting yet only one with the political weight to effect changes. The issue surrounding gay rights, or lack thereof, in The Bahamas remains undefined, undocumented and under reported, yet it is clearly marked as an agenda. This characterisation allows the government to sidestep the matter under the guise of focusing on more pressing national issues such as crime, or unemployment, both of which apparently only take place under nondiscriminatory circumstances.

Also last month, Saint Lucian activist Kenita Placide presented a statement on behalf of the LGBT caucus at the 58th session of the UN Commission on the Status of Women (CSW). Ms Placide said: “The criminalisation of adult consensual sexual activity and our communities, along with efforts by political and religious authorities to manipulate and stoke fears about sexual orientation and gender identity, only makes matters worse. Whether at the national level or at the CSW, decision makers must stop using these issues and our lives for their geopolitical gain.”

But where is the motive, where is the activism? In 2014, there are still no local reporting mechanisms to characterise crimes against persons based on sexual orientation, and as a result no concrete evidence of human rights abuses.

In a study released last year the Pew Research Centre found global correlation between age, secularism and affluence on individual attitudes on homosexuality. Basically it’s looking like the young, rich and not-so-religious are cool with gay people. Not too promising for the Caribbean, where the masses straddle the poverty line with hyper-spirituality, and the old show no signs of relinquishing influence.

But what do we know statistically? The 2013 Guyana study conducted by Caribbean Development Research Services Inc (CADRES) discovered that the majority of Guyanese are tolerant or accepting of homosexuals despite a pervading belief that being homosexual is a matter of choice. CADRES, a political consulting firm, reported that 58 per cent of Guyanese are tolerant or accepting, 17 per cent are undecided and 25 per cent homophobic.

Perhaps the crowning glory of the study is the data indicating that three per cent of Guyanese identify as homosexual and four per cent admitted to bisexuality. CADRES goes on to uncover that the majority of Guyanese support the retention of the buggery law – though it was explained that many were unaware of the law and its implications.

During her presentation lecturer Dr Melissa Ifill said the study was critical to expanding a research body that has been limited, and inevitably stigmatised, by contextual focus on HIV/AIDS research, which has been the primary donor of prior qualitative studies.

In Trinidad and Tobago there is also active discussion on the inclusion of sexual orientation protections in the constitution. The country recently completed its constitutional reform commission and the resulting report has been characterised as fuel for political cowardice on the issue.

In an interview following the report’s release, Coalition Advocating for the Inclusion of Sexual Orientation (CAISO) spokesman Colin Robinson slammed the commission for enabling political cowardice at the sacrifice of human rights to a measurable number of citizens. On the issue of protections the Trinidad and Tobago commission ruled that there should be more dialogue on the issue.

Mr Robinson said: “We estimated 3,500 adults are homosexual based on 2013 poll – this is a very conservative estimate. That number is equal or larger than a number of ethnic and racial minorities and we don’t have debates about their rights … what are we waiting for? We’ve had the national debate, we’ve seen movement on this issue, we’ve seen visibility of citizens, we’ve seen a constitutional reform commission deeply understand and get it right, get the conclusion of the issue right, but then get the solution wrong.”

Herein lies the challenge: who is going to prove it to Rev Patterson, and how? Where are the hard facts to stand up against people who insist that legal technicality is the ceiling as far as LGBT rights are concerned; to embolden politicians? To Rev Patterson and many others afforded a national platform, the campaign to amend laws for protection based on sexual orientation is a non-issue.

By framing LGBT rights as agenda and not a human rights issue we delegitimise victims’ claims by creating division between two fictional groups. It also characterises any lobby for increased protections as an “agenda”, a term that has been used by detractors to connote direct personal gain of one group over or against the will of another. In this case the larger group represents a nameless, faceless and emotionless majority that are somehow diametrically opposed to homosexuality yet don’t feel strongly enough to negatively harm the tiny community.

Five years ago former Tribune news editor Paco Nuñez wrote: “The problem with constructing a national identity out of generalisations is that it forces you to leave out the details, especially the ones that go against your polished version of the truth.”

Debate over gay rights in the Bahamas has been dominated by faith-based institutions and geographically bounded to New Providence for too long. The discrimination and social exclusion of the LGBT community is negatively correlated to the education and sensitivity training for public servants on the issue. The government must first educate public servants of their duty to LGBT members and sensitise workers on how the denial of public services constitutes a human rights abuse.

By denying discrimination - and resulting dialogue - validity on a national platform, the government authorises a culture of silence on human rights abuse. In light of statistics emerging from the region the time has come for local research to determine public attitudes on the issue and the way forward.

Bolstered by empirical data, evidence-based dialogue can provide constructive rebuttal to the vocal minority that dominates the public sphere in a bid to extend generational fears and stigma. Or to be fair, it may prove once and for all that the LGBT community is in fact, too tiny to count.

April 28, 2014

Tribune 242

Niccolo Machiavelli ...the monster dredger and reef destroyer ...should not be allowed to tear up the seabed off the coast of north Bimini

‘Reef Destroyer’ arrives in Bimini

By Diane Phillips & Associates

Machevelli dredgers off Bimini harbour

 
Environmentalists say pristine dive sites set to be destroyed in defiance of senior judge’s warning

Niccolo Machiavelli ...the monster dredger and reef destroyer

A mammoth seafloor dredger, dubbed ‘The Reef Destroyer’ by local environmentalists, has arrived in Bimini as developers forge ahead with construction of a controversial ferry terminal despite a top judge’s stern warning.

The 450-foot, 1,200 ton Niccolo Machiavelli is a specialized cutter-suction dredger designed to break up hard material which standard dredgers cannot remove. It is among the most powerful machines of its kind, and is set to be unleashed on one of the most pristine and significant marine ecosystems in the world, environmentalists say.

“That monster dredger cannot be allowed to tear up the seabed off the coast of North Bimini,” said Fred Smith, QC, attorney and one of the directors of fast-growing environmental movement Save The Bays. “There are 14 world-class dive sites and some of the most sensitive and important reef systems on earth there - many of them directly in the developers’ intended path of destruction.

“Resorts World Bimini is being allowed to move full speed ahead by a government that has failed in its mandate to act in the interest of Bahamians – and this despite a strong warning from one of the country’s top judges.”

Last month, Court of Appeal Justice Abdulai Conteh told lawyers for the government and Resorts World Bimini that construction should not be allowed to progress while the project is being challenged in the courts.

"In a democracy, no self-respecting government would do anything to jeopardize proceedings before the court. When there is a contested issue, one should not change the facts on the ground until a decision is made,” the judge said. “It’s more than a precept, and it is applicable in the Bahamas - it's about the rule of law.”

Justice Conteh's comments came as part of the ongoing appeal by Save The Bays and the Bimini Blue Coalition against a Supreme Court’s ruling that unless Smith’s clients pay a collective $650,000 ‘security for costs’ to the government and Resorts World Bimini, their judicial review action would be dismissed.

“Clearly, this administration has no self-respect,” Smith said yesterday. “The justice spoke to the grave implications if work continues, but the government has obviously given carte blanche to the developers, and they are racing ahead to get the work done before justice can run its course.

Environmentalists in Bimini say work on the ferry terminal is continuing despite Court of Appeal Justice Abdulai Conteh’s statement that the facts on the ground should not change until justice has run its course. Opponents of the development have circulated photos of newspapers dated after the judge’s remarks, with work underway in the background.

“This is always the way in the Wild West development show that this country has become. By the time a court can decide if a project is being undertaken according to the law, it is already a fait accompli, the environment has already been irreparably damaged, and local communities have already been overwhelmed or displaced.”

Smith noted that following Justice Conteh’s remarks, the attorney for Resorts World Bimini promised the Court of Appeal his clients would do nothing without the appropriate permits.

“The responsibility for this falls squarely in the lap of the government,” Smith said. “If work is continuing it is because they are allowing it to continue. They continually bow to the will of wealthy developers and the Bahamian people are always the losers in the end.”

On April 25, Smith wrote to the Attorney General’s Office urging the government not to do anything to jeopardize the Bimini judicial review proceedings.

“We would be grateful if you could urgently revert with confirmation that your respective clients will maintain the status quo (by which we mean, not carry out or allow the carrying out of any further changes to the development site including construction or pre-construction operations” the letter said.

In a letter to Resorts World Bimini, sent on the same day, Smith asked the company to confirm whether the government had granted any permits, licenses or approvals in respect to the development.

Smith said there has been no response to either letter to date.

Meanwhile, a recent presentation by marine biologist Dr. Kristine Stump demonstrated that under successive developers, the Bimini project has already had serious negative effects on the marine environment.

The results of her study showed declines in several important fish species that occurred after mangrove deforestation.

“We found acute and chronic effects on not only the sharks, but also the entire marine community following the development within the lagoon,” Stump told the dozens of scientists and conservationists attending an international conference in Nassau.

The waters around Bimini, Bahamas are home to a plethora rare and important marine species, including the endangered small-toothed sawfish.

The Niccolo Machiavelli is a cutter-suction dredger equipped with a rotating cutter head for breaking through hard materials such as compacted sediment and stone. The material is then sucked out by dredge pumps. The vessel can dredge to a depth of 35 meters and exerts a cutting power of 7,000 kW.

It is named for the 15th century Italian thinker whose notoriously cynical political theories gave rise to the expression “The ends justify the means.”

BahamaNews Ma Bey

April 30, 2014

Tax reform in The Bahamas ...particularly the introduction of a brand new system of taxation ...cannot succeed without the advancement of a focused and widespread education campaign

DNA Press Release - VAT Education BEFORE Taxation!

Value Added Tax (VAT) experts hired to advise the Christie administration on the implementation of the proposed tax regime have, this week, confirmed the long standing position of many local business owners as well as the Democratic National Alliance (DNA). That position? That tax reforms in the Bahamas – particularly the introduction of a brand new system of taxation – cannot succeed without the advancement of a focused and widespread education campaign.

According to comments attributed to both John Shewan and Don Brash which ran in the local dailies this week, the government of New Zealand, which has arguably had the greatest success in VAT implementation, attributes the success of that initiative in part to their commitment to an 18 month educational program.

Unfortunately for Bahamians, we have received no such commitment from this administration. For months, the government, while on one hand promising to launch such an educational campaign, has on the other hand, allowed the uncertainty associated with VAT to negatively impact plans for expansion within the private sector. Even now, just 63 days from the originally proposed implementation date, this administration has yet to table the accompanying legislation. They have instead chosen to bully local business owners into compliance with a system that very few people currently understand.

The Democratic National Alliance finds it particularly interesting that some of the recommendations from the government’s highly paid consultants are in fact similar, if not identical to the suggestions offered by members of the local business community. Outside of the obvious recommendation for a properly planned and executed education campaign, the tax experts – according to media reports – also suggested that the government finalize its tax design before beginning its VAT campaign in earnest.  So far, unfinished versions of the government’s tax plan which includes a list of exemptions which may or may not be part of the final plan have been leaked through the media and allowed to further muddy the waters on this matter.

The DNA asserts that this administration could have easily saved itself thousands of dollars in consultancy fees by simply listening to the collective voice of the men and women responsible for driving the local economy.

Also of note was the position that a Freedom of Information Act is imperative to the successful implementation of a VAT system. The DNA has long called for the passage of this key piece of legislation as a means of facilitating the free flow of information to the public as well as keeping our elected officials accountable.

The DNA firmly believes that like in New Zealand, the passage of such legislation in the Bahamas will work to establish a renewed trust and faith in this government’s plans for fiscal reforms. While the Democratic National Alliance believes in, and is committed to tax reforms, we simply cannot endorse the government’s handling of this effort thus far.

We hope now, that after hearing the recommendations from an outside source, the Christie administration finally takes the necessary steps to ensuring that any fiscal reforms enacted are implemented with a view to stabilizing the economy and improving the government’s relationship with the private sector.


Branville McCartney
DNA Leader on Facebook

April 29, 2014

Value Added Tax (VAT) exemptions result in a higher rate

New Zealand Vat Success Due To ‘Education, Almost No Exemptions’

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

NEW Zealand Value Added Tax (VAT) experts emphasised yesterday that a strong education campaign and “virtually no exemptions” are responsible for their country’s successful implementation of VAT.

John Shewan, an Adjunct Professor of Accounting at the Victoria University of Wellington and one of the experts expected to give the Bahamas government a report on implementing VAT next month, said: “The reason our education campaign was so successful was because their was a commitment to an 18-month educational programme, six months of which was prior to the implementation date, but the most important things happened 12 months after the implementation because there were a series of detailed explanation programmes targeted at all kinds of groups.”

He added that ideally, the Bahamas government, which is still seeking reports from the private sector before finalising its VAT plan, should actively promote VAT only when the tax’s design has been finalised.

He said it took six months of intense education programmes before VAT was implemented in New Zealand following the finalisation of its makeup and legislation.

Don Brash, the former governor of the Reserve Bank of New Zealand, added that the compliance cost of VAT is low in New Zealand because “everything was taxed at the same rate and virtually no exemptions were given.”

VAT exemptions are sometimes made for certain items and services in order to alleviate the burden that the “regressive” tax may have has on the poor.

However, the New Zealand tax consultants said the government should seek other ways of helping the poor.

To help the poor of New Zealand, he said the country’s government makes direct payments to low income families through tax credits.

The question of who deserves those credits, however, is controversial, he said.

“If you have a large number of exemptions your rate has to be higher. With a smaller number of exemptions the rate will be lower. We found that the one rate, no exemptions framework worked extremely well,” said Mr Brash.

The two experts said that ultimately New Zealand’s government recorded a revenue intake that far exceeded its expectations following their tax reform.

April 25, 2014

Tribune 242

The regressive nature of value added tax (VAT) ...and its corresponding effects on the purchasing power of the populace ...in particular the middle and lower classes in a society

The Fiscal Reform Series: A model VAT implementation

In the midst of the continuing debate on fiscal reform in The Bahamas, we must keep our eyes on the prize (and the price) and not forget the ultimate goal of embarking on this important venture.

The fundamental purpose of the fiscal reform exercise is to reduce the government’s recurrent deficit, curb and control expenditure, improve the efficiency and effectiveness of tax administration and restore our debt-to-GDP ratio to a more healthy position while ensuring that the country experiences economic growth and development.

It must be reiterated that if it decides to, The Bahamas will not be the first jurisdiction on the globe to implement Value Added Tax (VAT) and will probably not be the last to do so. There has been considerable discourse on the experiences of other nations that have implemented VAT, with Barbados being referenced from time to time, although the opinions on its level of success have been diverse.

It is noteworthy that Singapore and New Zealand have been touted as success stories in the introduction of VAT. This week, we conclude this series with a look at what model VAT implementation would entail and whether it is possible in the Bahamian context.

Fiscal reform and the tax component

In the case of The Bahamas, there has been a consistent call for the better administration of existing taxes and improvement of compliance with the same. Additionally, stakeholders including the private sector have called for better management of government expenditure with specific recommendations for target reduction in public spending.

The importance of economic growth in the overall equation has also been highlighted during public discourse. The vital message from opponents and commentators on VAT has been the need to focus more on a comprehensive fiscal reform program than on tax reforms aimed at increasing government revenue.

There is no doubt and we all agree at this point that reforms are mandatory and urgent action is required. The interesting point in this debate is that the aforementioned points are all elements of the government’s fiscal consolidation plan. This suggests that both sides appear to be on the same page in relation to the approaches to be taken to address the country’s fiscal imbalance.

However, the bones of contention seem to be the order in which the plan is implemented, the ability of the government to execute the plan and the selection of new taxes and measures to enhance government revenue.

The ideal VAT implementation

The general consensus among consumption tax experts is that this form of taxation works best when it has the broadest base possible and a single or common rate for all supplies. Ideally, the need for tax reform will not only be echoed in words by relevant stakeholders but also supported by their actions.

While skepticism over government initiatives aimed at raising revenue is to be expected, there will be general buy-in among the entire populace based on the financial circumstances of the country. For its part the government would also have done a decent job in explaining the reasons for the necessary reforms and the consultation as well as the education processes would be comprehensive including all stakeholders while providing ample time for feedback and rollout of the tax.

The reality however is that this is often not as easy as it seems due to the normal reaction of the private sector and the entire public to the imposition of taxes in general and the implementation of new taxes in particular. When considered in addition to the politicization of tax reforms and the fear of political backlash by the government of the day, this issue becomes even more complicated.

The Singapore experience and The Bahamas’ reality

The experiences of several countries that have implemented VAT or a similar consumption tax show that it is an efficient and effective form of taxation from the government perspective. The often referenced inbuilt compliance/self-policing feature of VAT, stability as a source of revenue and lesser susceptibility to economic cycles continue to be the main reasons for its success rate.

Like The Bahamas, discussions on tax reform in general and the goods and services tax (GST), which is identical to VAT, had been taking place prior to the implementation of the GST on April 1, 1994.

Singapore had issued a White Paper in February 1993 although their government had a draft bill by 1991. The introduction of GST in Singapore was accompanied by a reduction in other taxes including corporate and personal income taxes, among others.

The adjustment of taxes and tax rates as well as grants continued in the years after GST was introduced. It is important at this juncture to state that Singapore enjoyed fiscal surpluses as a percentage of GDP in the year prior to, and the year following the introduction of GST.

Under Singapore’s GST system, only exports are zero-rated while certain financial services as well as the sale and lease of residential properties are exempt. In essence, Singapore was able to maintain a very broad base for the GST.

The introductory registration threshold under Singapore’s GST was SGD 1,000,000 (approximately USD 800,000) and the standard rate was 3% with a commitment not to increase the same within the first five years. It should be noted that Singapore projected that its revenue would be negatively impacted during the transitional period with a return to revenue neutrality subsequently.

In comparison to The Bahamas, Singapore was enjoying economic growth and budget surpluses and was therefore in a much better financial condition when the GST was introduced. Hence, The Bahamas, stuck between a rock and a hard place, cannot afford a transitional period of revenue negativity for the government.

Additionally, the high registration threshold and low GST rate were possible due to the existence of a myriad of other taxes which were reduced to accommodate the new tax in Singapore. Unfortunately, our precarious financial condition and the composition of our economy do not allow for a similar approach. Finally, unlike The Bahamas, one single political party – the People’s Action Party has dominated Singapore’s politics since independence in 1965 gaining significant standing over this period.

The impact on standard and cost of living

Any discussion on VAT will likely include reference to its regressive nature and the corresponding effect on the purchasing power of the populace, in particular the middle and lower classes in a society.

While the government has indicated that certain items (including bread-basket items and other essential services) will be exempted either in their entirety or subject to an established threshold, the concerns remain among consumers. Representatives of the government, by their own admission, recognize that their efforts to boost the level of public awareness and the education of individual consumers have not been stellar.

It remains very important that any revisions to initial proposals be circulated well in advance of the implementation date and a more effective education program be launched and properly executed.

In December 2013, the Financial Secretary indicated that the government will expand social safety net programs by $30 million in the first year that VAT is introduced to provide transitional relief to those that would be unfairly impacted by the new tax. The expansion, according to the government, would last for the first three to five years following the implementation of VAT.

While the adequacy of the increased allocation to welfare programs is subject to scrutiny, this compensatory measure, which is aimed at mitigating the impact of VAT on the poor, differs from the approach taken by countries such as New Zealand, Australia and Canada due to the existence of other forms of taxation.

In the case of New Zealand, targeted family support income tax credits and welfare benefits via the Guaranteed Minimum Family Income (GMFI) were pivotal in presenting the case for the implementation of consumption tax due to the reduced impact on families with low incomes.

Upsides of VAT?

The obvious expected boost in government revenue, projected reduction in our national debt and recurrent deficit as well as maintenance of our sovereign rating as a result of the introduction of VAT have been reiterated by various commentators. While these benefits are necessities, are there any other additional or potential advantages that could accrue to The Bahamas and Bahamians as a result of VAT?

Will the effective nature of VAT be considered as a part of a bigger reform of existing taxes with a view to replacing the less efficient multiple taxes in existence? Will the introduction of VAT increase the overall tax compliance rate for The Bahamas?

Will the equitable aspect of VAT lead to a redistribution of resources within the Bahamian economy in the long term? What impact will VAT have on the ease of doing business in The Bahamas in the long run? With the successful implementation of the government’s fiscal consolidation plan, can we expect a reduction of other taxes and duties in the long run?

The government will do well to address these questions as part of the education process. Singapore’s GST system was modeled after that of New Zealand in relation to the broad base and single rate. Hence, the proposed discussion between stakeholders in The Bahamas and New Zealand should be instructive and enlightening.

• Arinthia S. Komolafe is an attorney-at-law. Comments on this article can be directed to a.s.komolafe510@gmail.com

April 22, 2014

thenassauguardian

The Democratic National Alliance (DNA) is doubtful that this Perry Christie led Progressive Liberal Party (PLP) administration ...is capable ...or interested in keeping any of its promises to the Bahamian electorate

DNA says: PLP Late Again!

DNA Leader - Branville McCartney

The PLP’s approach to governance since taking office in 2012 has left much to be desired. In what has seemingly become their modus operandi, this government has proven time and time again that it is unfit to oversee the affairs of the nation. Despite numerous public assurances that they would aggressively tackle the country’s many pressing issues, this PLP administration has proven itself dysfunctional, unfocused and incompetent; failing to meet their own legislative deadlines on issues relative to tax reform, a Freedom of Information Act, gaming, crime and countless other policy initiatives such as job creation, all while reneging on the countless promises made while in opposition.

Most recently, the Minister responsible for referendums Bernard Nottage admitted the government’s failure to set a definitive date for the proposed constitutional referendum. Shortly after taking office, the Prime Minister offered grand pronouncements of the government’s plans in this regard in which he set a November 2013 date.

The Constitutional Commission headed by renowned local Attorney Sean McWeeny did an excellent job in securing public feedback and reviewing the various aspects of the constitution which deserved attention; eventually compiling an impressive and comprehensive report which was presented to the government well in advance of its initial target date. Their work is certainly to be commended. True to form however, Mr. Christie showed no follow through and was forced to push the date to June of 2014.

How disappointing! Rather than use the additional planning time wisely however, this administration has again squandered the better part of this year focusing on trivial and insignificant matters and will by all indications, be forced to postpone the vote for a second time. While these revelations are certainly disappointing, they are far from surprising, particularly considering the ineffective nature of this administration.

Would the additional time not been ideal to launch the promised education campaign on the issue? Where is the so called commitment which the Prime Minister pledged to removing all vestiges of discrimination against women from the country’s constitution? This apparent lack of focus and political will is only further evidence of the careless and flippant disregard the PLP and members of this administration have shown and continue to show for the contributions of Bahamian women in this country.

Further, the Bahamian public ought to be reminded that the former PLP Administration commissioned a constitutional Commission to review the Constitution headed by the late Paul Adderley. Recommendations were made and true to form NOTHING HAPPENED!

Even more disappointing, is the fact that this is not the first time that a Christie led government has floundered on the planning and execution of a referendum. One need only think back to the disastrous January 28, 2013 referendum on Gaming which was also delayed as a result of the government’s failure to plan appropriately. First, this administration failed to properly educate the voting public on the impact of a legalized web shop industry, while refusing to consider addressing existing laws which discriminate against Bahamians in their own country. Then, rather than respecting the wishes of the Bahamians who voted, this administration has shown a deep disrespect for the democratic process and has chosen to proceed with the legalization and regulation of the industry anyway.

The Democratic National Alliance is doubtful that this administration is capable or interested in keeping any of its promises to the electorate. It appears that the Prime Minister and his band of merry men have stopped caring about their duties for the betterment and advancement of the country. The government must get serious about its responsibilities and abandon this LATE AGAIN and less than mediocre style of governance. The Bahamian people must demand and expect good governance from the party they elected.

Branville McCartney
DNA Leader
Facebook

April 21, 2014