As indicated here... at an earlier post, the recent budget presented to Parliament by the FNM as been hailed as a great piece of work that will masterfully assist the poor, and on and on.
Recent events suggest to me that all this is simply a grand public relations exercise.
As most of our loyal readers know, your not so humble blogger works in the local automotive industry, and our in house broker was invited to a meeting at Bahamas Customs last Thursday night, June 26, 2008, to be informed of the changes in tax rates on automobiles, spare parts and fluids like oil among other items.
While I have not been able to review the changes in detail, one of the slides presented indicates that, "All the Ad Veloreum Rates were rounded off. e.g. The combined Duty and Stamp Tax Rates of 10% + 7% = 17% is now Fifteen Percent (15%) in the New Tarriff, and the combined rates of 35% + 7% =42% is now rounded of (hic) to Forty-Five Percent (45%).
The other change is these taxes will now be called Excise Taxes instead of Duty and Stamp Tax.
Maybe I'm jumping to conclusions here but bear with me for a moment.
1. The Government claims this is a budget to help Bahamians.
2. The rhetoric is that food prices will be reduced significantly because the government has removed the 2% Stamp Tax. This is yet to be realised of course.
3. The silence about the increased duty rates is deafening from the politico's.
4. The budget is said to be tax neutral, yet taxes have been increased by 3% on the items from which the government is said to receive most of its income (cars and parts).
Why can't we just get the untainted by spin facts from the political class?
If the government is at all concerned about collecting revenue to pay our astronomical national debt they had better become acquainted with Laffer's Curve, or as "Ludwig Von Mises wrote in 1949 when discussing increased taxes in the USA: "...the recent advances in tax rates produced only negligible revenue results beyond what would be produced by a progression which stopped at much lower rates" (Wikipedia).
Has The Bahamas government hit the wall where revenue will decrease as a result of Bahamians becoming unwilling to pay higher and higher taxes, putting more strain on those businesses that pay what the law dictates under threat of jail time?
