Higher taxes for the business community may erode investor confidence says The Nassau Institute

'Taxes hitting investor confidence'
By INDERIA SAUNDERS
Guardian Business Reporter
inderia@nasguard.com:



The Nassau Institute is pressing government to accept investor confidence may be eroded because of recent changes to public policies that have resulted in higher taxes for the business community.

It's among the most recent commentaries put forth by the group that advocates a free market Bahamas.

While the institute agrees that the U.S. economic downturn has serious consequences for The Bahamas, it believes there are things that can be done to help inject some enthusiasm into the entrepreneurial class-and introducing new taxes is not one of them.

"A government should not be destabilizing the business community with excessive taxation nor blindsiding them with rule/regulation changes that do not seem to be well thought out,"said a statement from the group."Yet The Bahamas economy has certainly had an abundance of new taxation and regulation in recent months.

"The government, while finally realizing their profligate borrowing and spending must be brought under control. It should also accept that investor confidence is rattled when they are not sure what public policies to expect next. So there is a delicate balance between"reasonable"taxes and rules/regulations and over taxing and over burdensome rules/regulations."

According to the institute, the public sector is now beginning to experience the devastating effects of these very tough economic times that the private sector has been under for two years now, and there are no easy political answers. It points to a recent article written by Dr. Robert Higgs, an economist, who asserts genuine economic recovery requires a substantial reduction of government expenditure, taxes and regulations, along with a credible government commitment to stay this less burdensome course.

The columnist believes it would give private entrepreneurs the confidence and time to generate prosperity; however, he said that anemic private employment tempts politicians to intervene even more in the economy, which heightens the uncertainty and discouraging investors further in a vicious cycle.

It's something the Nassau Institute agrees with fully.

"Recovery depends on private sector growth,"it said,"and shrinking the size of a government(expenditure, borrowing, taxes, regulation)that is now beyond the capacity of the private sector to support."

8/16/2010

thenassauguardian

Bahamas Blog International