Government has dismissed draft paper

As of Tuesday, December 24, 2013

EDITOR, The Tribune.

The Government has dismissed a draft paper of tax alternatives from the private sector tax coalition group, requested by the Prime Minister, claiming administration would be a challenge, among other “problems”.

Of course, the need for 100 accountants to administer VAT does not appear to be considered a challenge by or for the government.

But, we hear rumours of a an IMF report that The Bahamas collects only 26 per cent of the taxes allowed by present laws so one has to wonder if this is the reason the government wants to bypass its own tax bureaucracy in favour of making the private sector their tax collectors.

They can’t put their employees in jail or take their passports for not collecting the taxes, or enforce their confiscatory legal powers, but they will do that to private sector members that do not toe the line.

Could this non-collection of taxes by those mandated to do so be the “structural weaknesses” referred to?

It seems plausible that VAT’s stronger merits are that the government will bypass its own tax bureaucracy?

Curious indeed.

RICK LOWE

www.weblogbahamas.com

December 21, 2013.

john33xyz 10 years, 3 months ago

Rick, yes certainly the "structural weakness" is the present bureaucracy. The WHOLE concept of VAT revolves around its "be your brother's keeper" approach. YOU want to claim X amount that you already paid when you bought the stuff - as a credit when you sell it. That way you don't pay "double".

When a store says in its report to government (at month-end sales) that the total sales is a certain amount, and 15% of of that is so much - but they are subtracting out the X amount (above) that they paid to the wholesaler when they bought the stuff - guess what? Government is going to check the invoice number against filings of the wholesaler - to make sure the wholesaler paid against wherever they got it from, and that they are admitting also to getting X amount in VAT from you.

It is probably the only system that can work in a country where everybody is everybody's cousin.

My only suggestion, as I suggested to you a month ago, is that we ask government to implement the system at only 1% to begin with - that way the FOCUS is not on the money - but on the procedures.

It will still be a lot of money - but it will give time to get the kinks worked out. Three months should do it. Then VAT can be raised to 10% (easy for people to calculate) and customs duties can be reduced to 10% (except for luxury items, books, and medicine).

As long as the poor are not let off scot-free to continue operating their baby factories, there will be PLENTY of money - a lot more than the current 45% duties provide - because the 10% will be on "sales price" not on U.S. price - and it will actually be PAID not just "I ain't got nothing to declare", or boats offloading at night.

Good luck to us all. We're gonna need it.

ThisIsOurs 10 years, 3 months ago

"Plenty of money" scares me. This govt has clearly shown that they can not handle money. Look at the revelations at BOB, it's frightening, the VAT revenues will more than likely meet the same fate. Viewed as a bottomless pit of funding that can be used for their personal projects never to be repaid. Who will be forced to pay back BOB? God rest his soul, but will Al Jarret's debt be paid off or written off? When newly elected MPs are out of office in 2yrs unemployed, who will pay back their 1/2 million dollar uncollateralized loans?

VAT scares me not so much that money is being taken away from me, no I don't like it, but there's obviously worse to come if no drastic steps are taken. But what is even scarier is the possibility, the likelihood even, that they will put us through this pain and sit waiting on the far side of Summer 2014 to squander that money on their insatiable all for me baby appetite. And where will that leave us... 15% squandered and deeper in debt?...30%?