First appeared in The Tribune under the byline, Young Mans View here…
TODAY, as national anxieties are being expressed about Value Added Tax (VAT) and our country faces uncertain times, I’ve decided to take a cursory glance at this hot button topic with a view to expanding the discussion from various angles, from the local and international perspectives to more technical and scientific points of view, in a series of columns in the next week and thereafter. Yes, while one recognises that we’re facing an unsustainable debt to GDP ratio and, moreover, that we must reform our system and restructure our broken methods of tax collections, the government’s thrust to implement VAT on July 1, 2014 is nonsensical and absolutely farfetched.
There is no question that the perpetual gap between expenditure and revenue has put us in a very precarious position, a position that demands some type of real action but VAT is only one potential solution. Notwithstanding the fact that one of the PLP’s election mantras centred around ‘no new taxes’, to introduce a form of taxation such as VAT, without enough lead time to allow for proper dialogue, has created uncertainty in the country, not only among the business community but everyday, average Bahamians. The aforesaid, combined with an incongruously optimistic, impulsive approach to tax reform has forced the government into what appears to be a schizophrenic economic ramble where Bahamians are now being forced to hastily take a bitter pill.
As one learned friend of mine told me: “The debate on VAT forces those of us in the so-called responsible element of society to abandon the ‘I told so posture.’ And so, we’re now finding ourselves in the awkward position of having to provide the government with the ideas that they ought to have had and which they claimed to have possessed on day one. Thankfully the Bahamian citizenry have responded in such a way and are providing enough creativity that they just might bail this hapless crew out of their dilemma. It’s my hope that Bahamians remember this when it is time to punish them!”
And so, why VAT? Thus far, I haven’t seen any feasibility study showing where the government set about comparatively analysing the various forms of taxation. I know that in a paper a few years ago the IMF suggested that the Bahamas’ government “strengthen administration of existing property and trade taxes, review FDI (Foreign Direct Investment) incentives and shift the tax base to domestic consumption--endorsing the adoption of a broad-based VAT.” So, is the choice of VAT simply based on the IMF’s recommendations or did the government explore other options, say income tax or, for that matter, simply organising and launching an internal revenue service that collects all outstanding government debt and, even more, passing legislation that proffers serious penalties for tax cheats. It seems to me that rather than explore all our options, the government has capitulated to the international credit agencies!
Why can’t we look for creative means to forego or prevent our descent down the slippery slope on which many countries have found themselves?