Bahamians are Suffering in The Bahamas, Prime Minister Davis!

An Open Letter to Prime Minister Davis on Bahamian Suffering 

The cost of running The Bahamas is placed entirely on the backs of those least able to afford it, the wage earners, the poorest of us.

Dear Mr. Davis, 

You have spent much time lately talking about inflation impacting the high cost of living here in The Bahamas.  It is striking to me that for the most part, you and the majority of your class are completely immune from the realities facing MOST Bahamians. 

Most Bahamians do not have the luxuries you do.  Perhaps you have earned these luxuries.  Yet, I would argue that living paycheck to paycheck, uncertain of what tomorrow will bring economically, should not be the fate of most Bahamians in 2023, in a relatively rich country. 

Yet, these are our realities, Mr. Davis, not yours.  So, how can you say you and your party truly “represent” us?  How can you say we are all in this together? 

Even more important, is what you are not saying regarding the dire situation The Bahamas faces as a whole; in the collapse of our standard of living, rising crime, a 100% debt to GDP ratio, millions of dollars leaving our coffers on a daily basis to pay off loans which were taken out solely to cover up the corruption, theft, inefficiency and incompetency of our political class. 

This is before we confront the very real and near term costs associated with climate change mitigation.  Let me be direct here, Mr. Davis, most of our social problems stem directly from the regressive and odious taxation policies here at home. 

I am claiming that, above all else that is going on in the world, our own taxation scheme is what is causing the pain and suffering here in The Bahamas.  You have not mentioned this, as far as I know. 

Instead, you focus on things we can do nothing about.  There are things we can do here and now that would be game changers for our standard of living and hopes for our children's future. 

All this talk of Duty, VAT, NIB contributions, rising fuel and electricity costs, business licenses, of hiring people to go around as “price controllers”, is utter nonsense.  These are diversionary tactics to hide the real villain. 

Trickle down economics, upon which the premise of our taxation scheme is predicated, has proven to be an utter intellectual fallacy.  This experiment has failed everywhere in the world.  Why do we still cling to this lie that if we don't tax the rich our economy will prosper and everyone will be better off? 

The cost of running The Bahamas is placed entirely on the backs of those least able to afford it, the wage earners, the poorest of us.  Here in The Bahamas, we have taxation exactly backwards.  Rich people can come to the Disney World of the Caribbean, our Bahamas, and live virtually tax free.  No tax on their income.  No tax on their business gains, no real property tax, to speak of.  Is this fair? 

All taxes placed on businesses, are passed along to the consumer, the poorest of us.  With this recent FTX scandal, what stood out to me was not the level of criminality involved.  What really struck me was how willing we were to take Sam Bankman Fried's ill-gotten money and use it for frivolous political contributions, sports stadiums, high end real estate, yet not use a penny of it to ease the burdens of most Bahamians. 

Before a Bahamian wage earner's money is touched by the Bahamian government, we need to agree upon and implement a fair, reasonable and Christian way of taxing our people.  A progressive income tax is one way.  Taxing those best able to pay. 

Arguing against this is can only work with those uneducated and ignorant of fiscal and Christian thinking.  Regressive taxation, as we have here, is in the same category as defending marital rape.  

Smart, educated Christian people simply can't defend these policies anymore.  To ignore the very real social costs of our present taxation system is unacceptable. 

Our rising crime is economic in nature.  Poverty, homelessness, poor nutrition, poor educational outcomes, mental health issues, and suicide are all directly tied to our declining financial security. 

I maintain that it is not just poor household decisions which are at the root of these ills, rather they are a direct result of our unchristian, and unfair taxation of our people, by the political ruling class.  Until you are honest Mr. Davis, about the true causes of human suffering here in The Bahamas, you will only be a politician, never a leader. 

A true leader of the people would wish for the best possible outcome for all of us, and speak the truth.  A true leader would not support policies that benefit a select few, as you do now, who get richer by the day. 

If we are all truly in this together, the present status quo is unacceptable. Period.  You do not have to be a PhD. in economics to see what is going on here. 

That you do not have in your administration, even one bold, moral and intellectually honest member willing to speak to this matter, says wonders.  From my perspective, neither the PLP or the FNM, nor any other fringe party, has any hope of leading our country into the future. 

For all the talk of Christianity in this country, I find it absolutely incredible that we continue, in a methodical and calculating way, to place such unchristian burdens on the backs of those the bible refers to as, the least of us.  We are not behaving as a Christian country. 

Let's quit pretending, and claiming that we are a Christian nation, until we get our odious taxation system in line with Christian values.  Mr. Davis, the Bahamian people are only asking for fairness and decency. 

For too long we have accepted the short end of the stick, all for the benefit of the well-to-do and rich class, whom we refuse to tax adequately and fairly.  Until we make this substantial change of how we raise taxes to run this country, and pay our politicians, I can see no progress in our country that benefits the majority of the Bahamian people.  Until we fix our broken tax scheme, our social and fiscal ills will continue to get worse. 

Porcupine

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

The Coalition for Responsible Taxation on “phasing in” Value-Added Tax (VAT) over a three-year period in The Bahamas

Tax Coalition: Phase Vat In Over Three Years

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government should examine “phasing in” Value-Added Tax (VAT) over a three-year period, a co-chair of the private sector’s Coalition for Responsible Taxation warning: “You can’t implement taxes to the peril of the economy.”

Robert Myers, speaking to Tribune Business as the Coalition released its VAT ‘Queries and Recommendations’ submitted to the Government on October 28, reiterated that the “fear” in the private sector about the consequences of tax reform stemmed from the Government’s failure to-date to prove adequate information and consultation time.

Agreeing that the Government could be “100 per cent right” over the direction it was taking with tax reform, Mr Myers said it needed to show this was so by “sharing” all the studies and specifics it possessed.

“This is a fundamental change in this country’s way of doing business,” he told this newspaper. “This is a fundamental change in the way everyone lives and does business.

“Let’s get all the facts on the table and hash it out. There’s no need top throw rocks at each other. We all benefit from the right solution. Let’s make the right decision as a nation.”

The Coalition identified 12 areas of ‘macroeconomic concern’ in its latest missive to the Government over VAT, and Mr Myers told Tribune Business: “First and foremost, you cannot implement taxes to the peril of the economy.

“That is the primary objective. There are just too many examples, in Barbados, Grenada, where their economy was troubled. They tried to resolve it by introducing new taxes, and that sent the economy backwards.”

Mr Myers said Grenada, for example, was now reducing VAT on construction materials and providing incentives to encourage contractors after the tax’s implementation “killed” the sector there.

While there was no evidence to suggest something similar would happen in the Bahamas, he added: “It’s just to say that if this is happening elsewhere, maybe we should take a look at it.”

In the ‘Queries and Recommendations’ sent to the Government, the Coalition reiterated that VAT’s implementation was “a seismic change to the system” that meant both the Government and private sector needed adequate time to prepare.

Restating its previous call for VAT implementation to be delayed for at least 12 months after the relevant legislation, regulations and Tariff Schedule had been released, the Coalition added: “Consideration should be given to phasing in VAT over a reasonable period, for example, three years, to minimise the potential negative impacts of inflation.”

Government minister and Ministry of Finance officials, particularly those working on VAT’s implementation, have suggested that the Bahamian business community’s fears are “unwarranted” and, in some instances, amount to ‘scaremongering’.

But Mr Myers and the Coalition have both pointed out that this has resulted directly from the ‘information vacuum’ created by the Government’s failure to publish the specifics on VAT, including studies on its likely impact that have been done - or are being done - by the likes of the International Monetary Fund (IMF) and Inter-American Development Bank (IDB).

Acknowledging that this had sometimes resulted in “hysteria and one-sided debate”, the Coalition added: “The lack of such information to date has contributed to the paranoia and apprehension of the business community and consumers.”

Mr Myers told Tribune Business: “There is this perception, fear in the marketplace, and you are having the result of not providing adequate time and information.

“Maybe you [the Government] know what we don’t know, but share it. Maybe you’re 100 per cent right. We don’t know, but share it. It’s so frustrating.

“You can already see certain businessmen, the fact that they’re now backtracking themselves on certain projects, is not good for the economy. That creates uneasiness.”

The Coalition, meanwhile, told the Government that VAT’s inflationary impacts, which has admitted itself, could have “consequences” for the Bahamas’ economic recovery.

Calling on the Christie administration to collaborate with the Bahamian private sector “to obtain the greatest possible buy-in by registered businesses and consumers”, the Coalition warned: “The majority of businesses have been experiencing an inability to increases prices in the past few years.

“Gross profit and net profit margins have been reduced following the recession, with no evidence of an ability of consumers to withstand price increases.

“Low net profits or net losses threaten the viability of small and medium-sized businesses.”

Mr Myers praised the Government for containing inefficiency, waste and shrinkage in its spending, and agreed that it needed more revenue to tackle its chronic deficit/debt problems, and the imbalances in the public finances.

But he warned: “To make a mistake and it backfires.... Do you want growth to slip by 2 per cent, 4 per cent, slip into negative growth? I don’t think that’s the desired result.

“Maybe take longer to get into this. No one says you don’t need more revenue, but let’s be measured.”

And the Coalition co-chair added: “We’ve got to make sure this is right for us, and not just right for the business community or right for the Government.

“It’s got to be right for the consumer, right for the private sector and right for the Government. Right in the broadest sense of the word. It’s just not been done. That kind of inclusiveness is not there.”

October 04, 2013

Tribune242

Caribbean Blog International

The Bahamian People and Businesses are Faced with a Limited Scope of Concessions in The Bahamas Government's 2004/2005 National Budget

The Bahamas Government Revenue Limits Concessions For The Bahamian People and Entities

PM Reveals New “Limited” Concessions For Bahamians

 

 

By Hadassah Hall

Nassau, The Bahamas

Journal Staff Writer

05/27/04

 

 

 

Until there is a recovery of recurrent revenues, the Bahamian people are faced with a limited scope of concessions in the 2004/2005 budget presented by Prime Minister Perry Christie on Wednesday.

These new concessions include adding bath soap to the breadbasket items and eliminating customs duties on ink and certain other materials required for computers as part of the ongoing programme to encourage computerization.

Mr. Christie also revealed that the government would remove customs duties and stamp duty on imports of building material for use by private schools so as to enable them to maintain standards. 

Mr. Christie said he is also eliminating customs duties on all musical instruments so as to assist professional musicians and many bands formed by young people.

On the other hand, the government is expected to effect a more “stringent penal regime” to discourage and punish tax evaders in relation to stamp duty collection.

Mr. Christie said the Stamp Act would be extensively amended to reduce the losses resulting from the numerous schemes by tax cheats.   He said it is currently the trend in commercial transactions and in the sale of land.

According to the prime minister, the amendments to be laid before parliament in short order are projected to realize an additional $10 million for the treasury.

Mr. Christie added that the government must continue to modernize the existing revenue system.  He said this is why the major emphasis is on formulating and implementing measures to strengthen revenue administration.

In addition to strengthening the stamp duty collection system, a new Trade Information Management System is being installed in the Customs Department.

Using the latest information technology, Mr. Christie said, the system will enable customs authorities to identify and control areas where there is or potential for a serious risk of revenue leakage.

Mr. Christie emphasized how crucial it is that all taxpayers meet their obligations.

“It is incumbent on every responsible taxpayer to honour his or her tax obligations in a timely manner,” Mr. Christie urged.

Additionally, the prime minister said the government’s strategy to “deliberately avoid” increasing the burden of taxes on Bahamians is due to the country being on the threshold of achieving significant improvements in revenue collection and administration.

The prime minister is confident that the expanding economy will provide stability and growth to key sectors like tourism and financial services, therefore generating additional government revenues without the need to raise taxes.

Mr. Christie admitted that during the past two years since assuming office, the Progressive Liberal Party government observed with “great concern” the difficult revenue position that he said constrained the full implementation of its policies.

He pointed out that in the two previous budgets, despite the weakness of the revenue position, the government deliberately avoided increasing taxation.

“I believed that the proper course was to concentrate on strengthening revenue administration rather than on increasing the burden of taxation on Bahamians,” Mr. Christie said.  “I am continuing with this patient strategy in this budget which contains no new revenue measures impacting directly on the Bahamian people.”

The prime minister said this also includes closing loopholes in the existing system that results in a substantial loss of revenue.

Mr. Christie added that the government at a later date proposes to review a wide range of fees and charges that in some cases have not been changed in decades.

In relation to revenue, Mr. Christie said the government expects a 5 percent increase in recurrent revenue over the 2003/2004 budget level.  He said this represents an increase of $132 million or 14 percent over the 2003/2004 projected out turn that was less than the budget estimates.

He also said that the government is making a small number of adjustments to existing sources of revenue to provide $27.3 million.  Mr. Christie disclosed that among them is the government’s intention to sell the Radisson Hotel for at a net profit of least $10 million.

A Move to Overhaul The Bahamas Tax Structure

The Bahamas Government has engaged the services of two of the foremost Value Added Tax (VAT) experts of the Crown Agents group

Bahamas Tax System Under Review

By Candia Dames

Nassau, The Bahamas

26/04/2004

In its most tangible move yet to begin the process of overhauling the country's tax structure, the government has hired a U.K-based consultancy firm to review the present system and make recommendations for change.

"We've [made] good progress," Minister of State for Finance James Smith told the Journal.

He said the government has engaged the services of two of the foremost Value Added Tax (VAT) experts who are a part of the Crown Agents group.

Minister Smith said that once this study is completed, the government will make a determination on the way forward.

"The whole idea is to look at this new tax regime [to determine] if it's something we really want to do," he added.  "If we were to change from one to the other, do we do so immediately?  Do we do so over time?"

VAT is a form of indirect tax applied to goods and services that increases the prices of those goods and services.

Minister Smith noted that, "We can have an efficient tax regime which would benefit the government from the point of view of increased revenues, the public from lower prices and the businesses by releasing them from tying up funds in inventory."

For quite some time, government officials, economists and others in the private sector have been pointing to the need to overhaul the system of taxation in The Bahamas, given that various pending international trade agreements require discriminatory border taxes to be abolished.

The need exists for The Bahamas to depend less on customs duties, Minister Smith has said repeatedly, while pointing to the enormous challenges involved in instituting a new system.

"We are engaging the international trade, the [Free Trade Area of The Americas], the [World Trade Organization] and even looking at the [Caribbean Single Market and Economy] and for all international trade agreements, they start off with asking you to roll back tariff rates because tariffs are generally regarded as restraints to trade," Minister Smith said.

"But for us more importantly the bulk of our revenue comes from import duties and they are very distortionary in the sense that they are what the economists would call regressive.  They're applied in such a way that the lower income households bare the brunt of the tax because it's essentially a consumption tax."

He said the government is working on tax overhaul "quite earnestly."

"If we decide to go forward, clearly I would have to get the green light from the government and I would have to discuss with the wider community the way forward," he said.  "We've still got some things to do. Suffice it to say, it is in the pipeline."