The Yoke of High Taxes on The Bahamian People in The Bahamas

Bahamian families struggle under the weight of high prices for food, household items, and basic hygiene necessities

The Bahamas Government Announced Tax Relief for Bahamian Consumers in Its 2025/2026 Fiscal Budget Communication to The People's Parliament

NASSAU, The Bahamas – While addressing the topic of Affordability Measures, during his 2025/2026 Budget Communication to Parliament, on May 28, 2025, Prime Minister and Minister of Finance the Hon. Philip Davis pointed out that, due to the recent effects of global inflation, economies around the world – including The Bahamas’ – have faced significant price increases.

“As a result, Bahamian families have struggled under the weight of high prices for food, household items, and basic hygiene necessities,” Prime Minister Davis said in the House of Assembly.  “This administration understands their difficulty, and in this Budget, we are acting decisively to bring relief to the people.”

He added: “As part of the ongoing efforts to promote affordability, we will be reducing the VAT rate to 5 percent on a range of products that are crucial for the well-being of our citizens.  These include: baby diapers; Depends; feminine hygiene products; prescription and non-prescription drugs including medications for those with chronic conditions; medical and dental supplies such as needles, blood pressure machines, lancets, dental cements and other dental fillings; and, of course, other medical and therapeutic items such as cell therapy products."

Prime Minister Davis noted that those reductions, that would take effect on September 1, 2025, were aimed at ensuring that Bahamians of all ages and stages of life “can access essential products without the added burden of high taxes”.

“Under the amended VAT Act, we are also extending VAT relief on building materials for religious institutions, in recognition of their vital role in supporting and uplifting communities,” he stated.  “This VAT relief will come in the form of VAT exempt imports or as a refund system if purchased locally.   In addition, customs duty is being removed from digital and changeable letter signs, making it more affordable for them to enhance their visibility and communication efforts.”

Prime Minister Davis continued: "We are also reducing customs duties on dozens of essential items -- products that Bahamians purchase every week -- items that matter in every kitchen, every bathroom, every nursery, and every home.  We are helping families, homeowners, and small contractors by removing the customs duty on the following items: refractory cement, mortars, and concrete, and similar compositions; copper fittings; screws; and nuts and bolts, simple but essential hardware.”

Prime Minister Davis announced that his Government was reducing duty on the following items: cleaning products; electric or battery-operated shavers; juice extractors; trucks weighing 20 tons and above; and filters of all kinds – from water to air conditioning filters.

He added that his Government was also taking steps to reduce the cost of fuel sources used by numerous households in The Bahamas.

“We are removing the 45 percent excise duty on butane fuel mostly used in portable stoves,” he stated.  “Many Bahamians rely on this fuel for a hot meal, whether day-to-day or during emergencies.  This is part of our broader commitment to build resilience and affordability into everyday life, especially where it may help the most.”

Prime Minister said that The Bahamas was committed to reducing greenhouse gas emissions by 30 percent by 2030 and achieving net-zero emissions by 2050, in line with the Paris Agreement.

“Our clean energy transition includes expanding renewable energy, promoting electric vehicles, and improving energy efficiency through key initiatives and projects,” he pointed out.

“Duty exemptions on household appliances with the highest level of energy efficiency will be granted,” Prime Minister Davis added.  “Freezers, air conditioners, and gas and electric water heaters will be duty free, once confirmed that the appliance will make a positive impact on climate change initiatives.  These exemptions encourage Bahamians to adopt cleaner technologies, directly contributing to our climate goals and a sustainable future for us all.

“In addition to these measures, prefabricated homes can now be imported with prior approval from Ministry of Works.”

Source

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

Value Added Tax (VAT) and Tax Reform in The Bahamas

By Dennis Dames:

We, the Bahamian people must realize that we cannot continue to borrow more than we are collecting in taxes.

We should appreciate as one people that something has to give now as it relates to getting our fiscal house in order.

Either we increase taxes, or cut spending significantly.  We do not have years left to answer that question, and to take sound and prudent fiscal action, my brothers and sisters.

So, that is why we are debating the impending institution of value added tax in The Bahamas; to help us to live by a balanced budget until further notice.

This Bahamian has already accepted the reality that we need some kind of tax reform in The Bahamas, so that the government could collect more money on our behalf, in order to contain the outrageous deficit spending – year after year.

Our National debt is projected to officially double in the seven years; from $2.4 billion in July 2007, to $4.9billion to June of 2014 – coming-up.  The fiscal deficit for thepast two years is reported to be more than $500.00 million.

It is a pity that the education process on the principles of value added tax (VAT) did not begin when the Bahamian government had signed on to the various international agreements years ago, like: the Economic Partnership Agreements (EPAs) with the European Union, and the World Trade Organization (WTO).  We know it was coming nonetheless, because the Progressive Liberal Party (PLP) and the Free National Movement (FNM) made it known that value added tax (VAT) is in the pipeline.  We went through the 2012 general election - recently, and the electorate voted overwhelming for the PLP and FNM.

So, what’s the problem?  Who’s shocked, who’s surprised, who’s outraged and who didn’t know that value added tax (VAT) was on the horizon?  The FNM has reminded us recently, that if they were elected in 2012, that they had plans to employ value added tax (VAT) by 2015 or in thirty-six (36) months; the PLP plans to install value added tax (VAT) by July 2014 or in twenty-two months of their 2012 general election victory.

I think like the pundit, Dr. Gilbert Morris in the Turks and Caicos Islands, when he sounded in that nation’s context, that it was not that the TCI people are against value added tax (VAT), but it was felt nationally, that more time was needed to prepare the people for the realization of value added tax (VAT).  The United Kingdom was seen to be rushing the brush and had to eventually relent, in the wake of public pressure from every political house - and cancel the Turks and Caicos Islands’ value added tax kick-off date of April 01, 2013.

Our Prime Minister said publicly, that he is open to delaying The Bahamas’ value added tax (VAT) execution date, which is scheduled for July of 2014.  It’s a great gesture, Mr. Prime Minister.  Now it’s time for all Bahamian people to face the music of looming tax reform in our country, and let’s start dancing and debating.  Our children and the generations yet unborn, deserve to enjoy the fruits of our wisdom.

November 13, 2013

Opinions on the grim prediction of the state of the Bahamian economy ...after the value added tax (VAT) is implemented

VAT Panic Increases

By Kendea Smith
The Bahama Journal

A prominent businessman and a well-known economist have differing opinions on the Nassau Institute’s grim prediction of the state of the economy after the value added tax is implemented next year.

According to the institute’s 48-page paper titled “The economic consequences of value added tax” David Godsell, a third year PHD student of Queen’s University School of Business, who authored the paper, says labourers can expect a decline in real wages which will in turn lead to a decline in the labour supply.

He adds that the government would stand to lose $165 million in revenue and the private sector would suffer $103 million in losses.

“Businesses and employers with VAT-based sales can expect reduced demand for goods and services, which will in turn reduce their demand for labour.  Under extraordinarily conservative estimates biasing towards heightened government revenues, we forecast VAT adoption will lead to a $165 million decline in government revenues,” he said.

“Simultaneously, we estimate VAT adoption will burden the private sector with $103 million in annually recurring compliance costs and an average of $4,300 in compliance start-up costs for each VAT registrant.”

The report concludes by pointing to failed VAT adoptions in countries similar to The Bahamas and by highlighting contemporary efforts to reduce budget deficits through reductions in government spending.

Upon hearing the news, former Chamber of Commerce President Dionisio D’ Aguilar said this report fuels the concerns of the business community that already fears the tax.

“The government has not made the case where the introduction of value added tax is not going to create an inflationary situation.  I can’t see where it is not going to cause prices not to go up.  And everybody is talking about prices going up from anywhere between 10 and 15 per cent in order to accommodate this increase in value added tax especially those in the service industry,” he told the Bahama Journal in an interview.

“For companies that don’t import a lot you are now having to collect 15 additional per cent.  You either add it on to your price or you eat a portion of it because your customer just isn’t willing to pay an additional 15 per cent for the service that you are selling.  So there is no doubt in my mind that it is going to cost an inflation effect because when prices go up and wages don’t budge you are going to have a decrease in economic activity.”

Mr. D’Aguilar pointed out that most businesspeople understand that the government needs to create more revenue because it is spending more than it is taking in.

But he said economists should come together to find other ways to achieve that goal.

“Instead of borrowing the money they want to just get it from tax revenue.  So basically you are taking it out of the economy to pay for what you are already spending.  It is not as if the economy is going to increase because it is already spending that money.  It is running huge deficits,” the businessman said.

“No one is excited about the introduction of new taxes.  Anytime you increase taxes there is a huge pull back. The government has one of two choices – it can either increase what it brings in or reduce what it spends.  Now, if it reduces what it spends one might argue that that too can cause an economy and cause a recession.  The fact of the matter is I agree to a certain degree with what the Nassau Institute has to say.  All of these businesses now have to change the way that they do business.  You have to pay more taxes to the government, you have to track it more and it is very depressing for a businessperson. It doesn’t get me excited to expand my business.”

But State Minister for Finance James Smith disagrees.

He argues that the government has no choice but to introduce a new tax system because the government’s spending habits cannot be sustained.

“No services are now taxed directly and the VAT will now take into account so at the very least you will be taxing both goods and services.  So the government should get more revenue.  No one can predict the outcome of the introduction of a new fiscal regime – involving a new tax. But it is highly probable that the government would receive increased revenues and that is likely to reduce the overall deficit,” he said.

“There are a couple of things that are being overlooked.  The government walked into a huge deficit and huge build up in debt.  If that continues and nothing is done about it the country would be worst off, even the ones that are complaining will complain more if you have to devalue you currency or because of a series of downgrades from international agencies or the inability to even borrow money or that you cannot put in place the necessary things that governments do – like education, health care and law and order.

“You can have a form of chaos if we continue down the road we are going.”

Mr. D’ Aguilar is now urging the government to present the information on VAT as soon as possible to decrease the panic among businesspersons.

“They need to get ahead of this and explain and say look this is what we think is going to happen.  The fact that they are just letting it out drips and drabs of information is annoying.  For example, what is the rate of duty going to be once we introduce VAT?  That is a critical number. Get it out there,” he said.

“We are eight months away from this thing being introduced and it is still very fuzzy on how this is going to work.”

Prime Minister Perry Christie said back in February that, “Intended with the introduction of this new system it is also proposed to affect the eventual reduction in import duties that will accommodate The Bahamas’ accession to the WTO, to reduce excise tax rates to compensate for the VAT, eliminate the business licence tax as currently structured and to replace the hotel occupancy tax.”

The prime minister said the new proposed tax system will also level the playing field for the poorest and wealthiest Bahamians.

VAT is expected to come into effect on July 1, 2014.

September 18, 2013

Jones Bahamas

White Paper On Tax Reform To Secure Adequate Revenues For The Future

Tax Reform in The Bahamas

	Rt. Hon. Perry G. Christie
Source:	Ministry of Finance
Date:	February 14, 2013

A Value Added Tax Within A Reformed Tax System

In the 2012/13 Budget Communication, the Government announced that it would address the issue of tax reform as a means of broadening the tax base to include both goods and services.  To that end, a White Paper would be prepared and issued to serve as the basis for extensive public discussions and consultations.

The overarching objectives of the tax reform proposals in this White Paper are threefold, namely:

1. to secure an adequate revenue base in support of modern governance;
2. to establish a tax structure that promotes economic efficiency and stronger economic growth; and
3. to make the tax system more equitable.

As a means of achieving these objectives, it is proposed that a Value Added Tax (VAT) be introduced as of July 1, 2014 as part of a fundamental reform of the tax system.  In tandem, we also propose to:

• - effect the eventual reductions in import duty rates that will accompany The Bahamas’ accession to the World Trade Organization (WTO);
• 
  
• - reduce excise tax rates to compensate for the VAT;
• 
  
• - eliminate Business Licence Tax as currently structured; and
• eliminate the Hotel Occupancy Tax.

Read more...

Comments can be directed to taxreform@bahamas.gov.bs.

The Bahamas 2004/2005 National Budget Draws Criticisms, and Praise

National Budget Debate in Parliament,  The Bahamas

New Budget Draws Criticisms; Praise

BY ROGAN M. SMITH

Nassau, The Bahamas

Journal Staff Writer

05/27/04

Some opposition Members of Parliament on Wednesday called the government’s 2004/2005 budget a “sham” that is loaded with hidden taxes and too many unrealistic expectations.

But at least two Independent Members of Parliament pointed to positives in the new budget.

Their reaction came shortly after Prime Minister and Minister of Finance Perry Christie unveiled his government’s new spending plan in a packed House of Assembly.

Brent Symonette, the Member of Parliament for Montagu and Official Opposition Whip, noted that despite assurances from the Prime Minister that there are no new taxes, there are plans to increase certain fees and implement an airport user fee.

Mr. Christie revealed that increases in bank licence fees will provide $3.5 million; and he revealed the plan to put in place the airport user fee.  Revenue collected for this fee will be used to upgrade security at ports and airports, he indicated.

Mr. Symonette said facility fees are just another way of saying taxes.

“It leaves a lot wide open,” he said.  “He (the Prime Minister) talks about coming back later to bring in further increases in fees and taxes.  This indicates on cursory reading of it, that this budget is a sham just to fulfill the legal requirements.

“They say if the economy does not rebound the way they intend it to- they will bring in new taxes and whatever are necessary to fund the government’s expenditure.”

Mr. Symonette said the budget is not very specific, and strikingly resembles last year’s budget in that it makes promises that never seem to materialize.

“There are many ifs in the budget; if the economy continues to grow; if these developments come off,” he said.  “To pin this budget on that is reckless, bearing in mind he had to admit there was some $50-odd million in flight oversight regulations that he put in the budget that didn’t materialize last year; plus the sale of Bahamas Telecommunications Company which did not materialize shows that there has been some reckless budgeting, and it’s continued in this budget.”

Leader of the Official Opposition Alvin Smith added, “Rhetoric and talk have become the trademark of the Progressive Liberal Party government.”

Mr. Smith said he is disappointed that the help and hope that the PLP administration promised back in 2002 has not yet been delivered to the Bahamian people.

He added that he expected the Ministry of Social Services’ budget to increase by a greater amount, since there are quite a number of persons on the Family Islands who need the government’s assistance.

“I expected more reductions in taxes, or elimination in taxes as it relates to duties or stamp taxes on some more basic items,” Mr. Smith added.  “There are only three items on the list, ink for computers, musical items, and customs duty and stamp tax for building materials, but only for private schools.

“I thought the government would have looked into some other areas.  I particularly thought that this year the government would have reinstated that programme we had when we eliminated taxes on building materials for most of the Family Islands.  There are too many unrealistic promises.”

Independent Bamboo Town MP Tennyson Wells said the prime minister seems overly optimistic and suggested that he should have been more cautious.

Saying no new taxes and no increase in taxes is simply a play on words, he said.

But Mr. Wells indicated that he was generally pleased with the spending plan the prime minister presented.

Another independent Member of the Parliament, meanwhile, praised the budget.

MP for St. Margaret Pierre Dupuch said that although he did not have enough time to study the budget communication, he thought the it was quite “innovative.”

“I was very impressed with several things,” Mr. Dupuch said.  “The first was that he was not increasing taxes and that plans were underway to increase revenue by increasing the efficiency of the government and the tax agencies.  I think that’s very important.

“He said that they were going to start an intensive training programme to prepare Bahamians to face the various challenges that will be coming, and the various job opportunities that will be available.  That is one of the things that is very seriously needed in this country because we have lost track of a lot of training.”