By KHRISNA VIRGIL
Tribune Staff Reporter
kvirgil@tribunemedia.net
PRIME Minister Perry Christie announced yesterday that the implementation of Value Added Tax (VAT) will be delayed for six months and when introduced will be at a much lower rate than previously planned. It was supposed to come into effect on July 1 this year.
VAT, Mr Christie said, will not take effect until January 1, 2015 and at the substantially reduced rate of 7.5 per cent from the originally proposed 15 per cent. The new rate will apply across the board, excluding a zero rate for exports.
While the original plans for VAT would be offset by a series of reductions in import duties, he ruled those out until at least the 2015/16 Budget.
Mr Christie added that the Ministry of Finance, which is being prepared as the primary administrator of VAT, is proposing much fewer exemptions from the tax. Mr Christie told Parliament that a full list of exemptions will be released shortly.
Until the full implementation of VAT the Ministry of Finance is preparing a regime of VAT inclusive rather than exclusive pricing with a view to simplifying price comparisons for consumers. Mr Christie said the price consumers see will always be the price they pay.
There is also a proposal for businesses that qualify for fiscal incentives on imports to have more control over the timing of recognising certain VAT liabilities through payment mechanisms, Mr Christie said.
Discussing the previously proposed reductions in import duties, which had been forecast to amount to around $300 million, he said: “Being able to streamline exemptions and position the VAT rate much lower than in the White Paper, the Government is not announcing any wide-scale reduction in import duties and excise taxes at this time. Based on the revenue performance of VAT early next year, the Government may be in a position to consider tariff and excise reductions at the time of the 2015/16 Budget. More general tariff rebalancing, however, is still a requirement that will need to be implemented once the Bahamas concludes the ongoing WTO negotiations.”
While the announcement should be heralded as good news for opponents of the new tax system, Free National Movement Deputy Leader Loretta Butler-Turner questioned whether the government would eventually increase the rate due to the lowering of other taxes. Overall, the FNM said the new rate and date are welcomed by the party.
She said: “The challenge we are going to have with the 7.5 per cent VAT is that once the government starts getting revenue from both streams, a border tax and VAT, my concern would be that there is a caveat in there that is going to put a time frame on how long the 7.5 per cent would be in effect. Because if they start they will have to decrease border tax. They may want to just increase VAT in less than a year to make up for those two streams of revenue we would be getting in the first instance .
“That for me is going to be a major concern in terms of the cost of living. So I think that they have got to truly determine when they are going to start cutting down on customs tax and tariffs. And how long a time frame can the Bahamian people and the business community expect the 7.5 per cent to be tied on because the next year if they go and increase it to the 15 per cent, which they wanted to do, I do not see us really growing the economy.”
The government has accepted the New Zealand tax experts recommendations to enlist the private sector in a public education campaign. The New Zealanders were consulted on VAT in the Bahamas last month.
As a result a three-person task force is being established to oversee the process, which will collaborate with the government’s internal activities and provide timely feedback to the Ministry of Finance on the appropriate emphasis of public education.
The task force will have a budget of $150,000 at its disposal. It will be responsible for helping to explain VAT to the business community and the wider public.
Comments
B_I_D___ 9 years, 11 months ago
So the whole VAT concept has gone to shyte...original plan was to come in at 15% and reduce duty by the same amount, trying to minimize the VAT impact on prices...now it is coming in at 7.5%, but they are not going to decrease and import duties. I call bull crap on that one.
Tarzan 9 years, 11 months ago
So now we have VAT that only the fewer and fewer lawful will pay; along with duty that only the fewer and fewer lawful will pay; along with real property tax that only the fewer and fewer lawful will pay.
Eventually we will have a small group of the lawful, and government will just visit us once a year to submit a bill for the entire budget.
Thinker 9 years, 11 months ago
Newsflash: Big Government doesn't Build an Economy! People engaged in Free Market Enterprise do. Always a reason to dip into the average citizen's pocket, isn't there, Big Government? The People have spoken loud and clear. NO VAT. Fix your incompetencies. Stop misappropriating millions and millions of the People's money.
sheeprunner12 9 years, 11 months ago
DITTO!!!!!!!!!!!!!! They will pay for this in 2017....... but Perry wont care..... he is fixed for life like SLOP and HAI............ he can now retire and live high off the hog............... the only thing is that this hog is starving to death
TalRussell 9 years, 11 months ago
Prime Minister fix the damn broken system before introducing a new tax system, cause not everyone can get you to personally intervene to employ them, while not paying they taxes. Comrades taxes do matter and citizens talk about them like it was a daily diet. If the government were to introduce a 1% VAT, we'd still complain that it was too damn high. Maybe not here in we Bahamaland but citizens are thrown in jail for coming up with all kinds schemes to avoid or dodge paying taxes of any kind. Business owners go ballistic at the mere mention of new or increased taxes, But what angers Bahamalanders most, is how in the hell can you be introducing new taxes, when hundreds of millions are left uncollected by the government, anything from taxes to many millions owing to BEC or for government fees, loans extended? The bigger question is, how can you trust your government to levy new taxes, when a budget is tabled in the House of Assembly and neither the government or Her Majesty's Official Opposition said not one singe word about poor people or the thousands living in poverty across we Bahamaland? How can Bahamalanders trust their government to be dipping deeper into their pockets when remarkably, neither this PM or former PM Hubert have a clue as to the total number of bodies collecting paychecks as Bahamaland's employees of the government. Comrades, if you have no clue how many are on the government's "Cadillac of guaranteed paychecks, where nobody ever gets disciplined, much less fired and collect benefits that no private employer would pay out" how in hell can the government expect Bahamalanders to just suck all this up? God God, PM even MP's and high ranking government employees ain't paying they taxes, fees and monies owed to the Peoples Public Treasury. Try sending few them jail, before grabbing from poor Bahamalanders pockets.
Tarzan 9 years, 11 months ago
Right on Tal. This and at the same time imposing the most regressive of taxes, called "numbers". That "tax" is paid by the poorest of the poor, and instead of 100% of net revenue going to government (which at least is what happens in the States) our government will take a paltry 15%. How can anyone defend that? Why not collect the real property tax. Far the easiest tax to collect. This is just one more tax that the insiders will duck and the poor will carry.
jlcandu 9 years, 11 months ago
Congratulations Tal,
I finally agree with something you said. The problem is that the offshore banking sector, which has billions of dollars of assets, will be untouched by VAT. The beleaguered consumer will "catch hell" in January when the cost of living will jump 10% since this idiot government is not going to reduce customs duties.
And guess what? Once this is passed into law, they can raise the rate anytime they need more money. So guess what? Next year this time, we will be paying 15 to 20% VAT.
God help us!!!
B_I_D___ 9 years, 11 months ago
Yeap...ASSuming they pull it off and launch on January 1st (which is a ludicrous idea...geee...let's kick off on one of the biggest public holidays)...I give it 12-18 months after they have launched it to crank the rate up. Willing to go on down to the numbers houses and wager a healthy bet on THAT one!!
ohdrap4 9 years, 11 months ago
yep, and, as the prices go up and people turn to online shopping, the central bank will limit those prepaid cards.
TalRussell 9 years, 11 months ago
Comrades, yesterday the governing PLP party of Lynden Pindling and Milo Butler who so beloved lifting up the lot of the working poor, were a no-show in the House of Assembly. Where were the PLP's with a pure heart for thousands of struggling Bahamalanders? While I don't expect it from Her Majesty's Loyal Opposition, since they don't even pretend to have pure heart for much which is Bahammalander, you'd think the PM would have a least mentioned the "poor" once during his many hours of presenting the budget and debate. If the PLP is no longer willing the champion the causes of the poor, how can they expect to remain in power come 2017? We need a few good men and woman to appear on the political scene, willing to champion for the poor. PM there was a time when you and your PLP colleagues were obedient to Pindling and Butler, but not anymore. What I say is, what the people did to Hubert, awaits this PLP, a PLP many find unrecognizable. There was never a division between Lynden and Milo over the long fight to advance the lot of the poor. The FNM have stubbornly refused to change their old ways and the PLP have totally forgotten what made them the party of the working poor and the many who find themselves involuntarily joining the ranks of the poor right across we Bahamaland. PM a pretty sad reflection on you and your PLP colleagues. PM I mean every word and I don't think I am alone.
B_I_D___ 9 years, 11 months ago
Just wait until 'Brave' takes over as PM!!
Emac 9 years, 11 months ago
Whoopeee yay!!! Look everybody, the circus is back in town!
TalRussell 9 years, 11 months ago
Comrade Tarzan while I have never been opposed to a Government owned and operated National Lottery, I have never been silent over my opposition to the cozy relationship this PLP government has "publicly" displayed for the number rackets operators. In fact, it is damnright shameful. It is disgraceful. It is disgusting and I didn't except it yesterday, wont today and will not come July 1, 2014. Most of all, it shows their total disrespect for voters. They act like the voices of the voters can go straight to hell. And, who are the people playing those silly numbers every day with their rents and children's lunches monies?. The poor Bahamalanders, that's who they be. The poor, hoping to win a little scratch of gold. Fools gold.
ohdrap4 9 years, 11 months ago
did you guys notice that the amount of VAT will not be displayed on the bill anymore?
that helps shops advertise themselves as "duty-free" and there will be no refund.
this also means only rupert roberts and his ilk will be paying taxes.
B_I_D___ 9 years, 11 months ago
Seriously? That surely cannot be true. Unreal.
Well_mudda_take_sic 9 years, 11 months ago
This comment was removed by the site staff for violation of the usage agreement.
digimagination 9 years, 11 months ago
Wonderful photograph of a group of undertakers readying to take Bahamians one and all to a mass grave!
linnassau 9 years, 11 months ago
Seems humorous but this is so very sad.
The_Oracle 9 years, 11 months ago
Actually, making pricing VAT inclusive will shield the Government to some degree from the public wrath at inflation and price increases, effectively hiding it, just like the duty. The public assumption will be that the stores are hiking prices. They are cowardly in not admitting this is all due to their mismanagement, and cowardly in raising taxes 7.5 % so they can "carry on" as usual. You'd have to be an idiot to start any new business in the Bahamas until the dust settles, maybe optimistically around 2017!
TheMadHatter 9 years, 11 months ago
So he says - they still haven't come up with the list of exempt items. I can tell you what will be on the list. The rule is simple : If an illegal alien would buy it - then it will be VAT free.
Wait and see.
TheMadHatter
Hogfish 9 years, 11 months ago
So VAT Plus customs duties staying the same! and then that on top of the enviromental taxes they put in..... my dear sweet lord please give us strength.
PGC you are the biggest pig ever to disgrace this country. And that's what your legacy is going to be.
What happen?? You jealous there een no Carlos to line your pocket properly? Bimini not good enough for you? or you just making sure there's enough for that 1/4 million dollar a year pension? What happen to 'Bahamians first'? oh i forget you don't care aboout what the people say! What referendum? lemme just give these numbers boys what they want so they keep paying for my war chest next election. The People be Damned!
I don't remember it ever being this bad. We truly gone from the fying pan into the fire. I'm tired and i'm sad.
sansoucireader 9 years, 11 months ago
On another note, are they ever going to take those PLP photos down in Rawson Square?
sheeprunner12 9 years, 11 months ago
When the mob descends on Bay Street in 2015.............. mark my words
ProfessorTinker 9 years, 11 months ago
I must say, Bahamians need to stop voting party line. This is what happens when ya vote party line and don't listen to the garbage that the candidates are saying.
Hypothetically speaking these number could be a little off.
Population 350000 Out of the 350000 -50,000 don't need to work. 300000-100000 are under 18 or still in school. 200000-75000 are retired and over 65 or older. 125000-12000 are disable So that left us with 113000 people that will directly suffer the brunt of the VAT and the rest of the people will suffer even more because they are not generating an income.
Jamaica, Trinidad, Guyana and where every else this VAT is working is a night and day difference from the Bahamas. There populations are about 3 to 5 times largely and they don't depend on Tourism.
So for this stupid PM to come up with such a ridiculous piece of BS legislation is just beyond me. Bahamian people wake the hell up before you start fleeing your country. If the government that you all just voted in is inept then demand a recall on the election or demand and early election and vote this Jack Ass out. Because only you and you alone will face the music. These guys are set they have money and they will escape paying the taxes.
Throw the dam mace out the window!!!!!!!!!!! ahahaha
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