The Tribune

EDITOR, The Tribune.

Please publish my open letter to my fellow taxpayers.

VAT. Those three letters have been the brunt of many a jest, the subject of many an adverse comment and unfortunately the cause of much National Trauma and Anxiety. Almost the entire year just ended saw frowns and concerns, voiced and withheld. This anxiety was certainly not warranted and for it to have been so is inexcusable. It was placed upon us unnecessarily.

The worst element of the introduction of Value Added Tax here in the Bahamas was not the fact of its introduction but rather the lack of understanding of its nature and its mechanisms. We were all led to an early understanding that this was not something anyone wanted, but rather something that we all had to accept because there was a “Bad Man” knocking at our door demanding that we do this to ourselves.

Of course, those who were versed in the understanding of the mechanisms of VAT and charged with its implementation figured it was a no brainer and didn’t take into account that not all brains work the same way. So the first mistake that was made involved poor education. Some say the reason for this was that the implementers of the tax didn’t know either so they couldn’t educate. There are those who say that obstructionists who perhaps feared the transparency that would be demanded of businesses wished for a heightened level of confusion and promoted a different kind of education. Whatever the reason for this poor level of education and effort to help us to understand, we finally got to January 1, 2015.

Having now gotten to January 31, 2015, here is my take on VAT so far. Business-wise, it is a wash for me as it clearly is something passed on to the final consumer. Sure it takes a bit of additional record keeping. For the consumer, this is not a necessity (the record keeping) but if you want to know for sure keep track of your receipts. I did for the whole month. I am speaking of my personal family expenses. Now I can’t be sure if my wife and son have been spending without my knowledge (I suspect they are) but they promise me they have kept the receipts and I have figured them into my calculations.

Here are the results. Firstly, I noticed very few changes in prices (exclusive of tax). I was, however, a little upset to see some food items, mainly fruit and meat, shift upwards. I certainly did not see any prices shift downwards. Weren’t some duties supposed to be reduced? Maybe these reductions can be looked forward to? For the month, VAT cost my family and me about $320.00. This does not include BEC. They haven’t given me a current bill. But I can extrapolate (for those of you who aren’t mathematicians or statisticians that basically means guess) from my past consumption. Now BEC always was like another mortgage payment, so 7.5% comes up to around $120.00. Yes I pay BEC over $1,500.00 per month. I hope the oil price reduction kicks in and lowers this for January to say result in a VAT of only $100.00. Yes, let’s add $100.00 for BEC VAT. For my other bills, like Cable Bahamas and BTC, I can also “guess”. They compute to something like $300.00, which adds another $20. That makes my VAT rise to $460.00 per month.

Here’s the thing, January was a quiet month. I spent myself silly in December to get ahead of the VAT and, let’s not forget Christmas. This means that January will probably prove to be a lower than average month for our spending. We bought no big-ticket items. So I can’t simply multiply this by 12 to get my VAT payments for the year.

Still if this was to be my monthly average for the year it means that the three of us will be paying a total of over $5,000 into the treasury because of VAT. It certainly won’t be less than this. Fortunately for me, I will not starve having to pay this but this leads me to believe that many will need cost of living adjustments or will suffer a decline in their quality of life.

I kinda think that there is an upside to this VAT business. But then I am the perennial optimist when it comes to human nature. I’d like to think that since we are all much more aware that we are indeed paying taxes (we never really believed we were in a tax free country, we only wanted the foreigners with money to hide to think so) we might now be more concerned with what is happening to this tax money we pay. I think it is only fair that as we are so agreeable to paying this tax and are doing so, those collecting it should also be equally agreeable at divulging where it is “going”. You notice I did not say “spent”. This is because I believe that some should be given to certain needy sectors of our society (no not them, not the politicians and their cronies). There are those who I believe will be wrongly affected by these taxes and they should get subsidies of some sort. I’m glad I don’t have to figure the details of that one out.

I do not believe that Government will pay down the debt with these new revenues. For them who don’t know what “pay down” means, it means new borrowing should be less than repayments. I am not even speaking of interest, although I am at a loss as to why anyone has to pay interest, I haven’t seen any for years.

I hope that this note on VAT helps you all to focus on a few issues and get out and demand greater transparency in Government matters.

Thank you Dennis and Andrew. And others.

SIMON RODEHN

Nassau, Bahamas.

January 31, 2015