By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
A Cabinet minister yesterday said it was “oversimplistic” and “problematic” to call for Value-Added Tax (VAT) to be removed from food items and other staple products.
During his contribution to the 2015/2016 mid-year Budget debate, Michael Halkitis noted the suggestions that the Government should exempt certain products from the 7.5 per cent levy, such as food, private healthcare and tuition education expenses.
The Minister of State for Finance said: “These suggestions are overlysimplistic and have the potential to seriously mislead the Bahamian people.”
He added that these calls failed to take into account the potential negative impact on the private sector, government revenues, tax administration and the likely impact on the 7.5 per cent.
VAT rate.
Mr Halkitis said that exempting food items was a “second best” or “inferior measure” to reduce the negative impact of VAT on lower income households.
“While a lower income family will typically spend a higher proportion of its income on food, a higher income family will typically spend much more in absolute terms on food,” he explained.
“Exempting food from VAT would provide a much higher dollar benefit to the high income family than the low income family.”
Mr Halkitis said the Government’s assistance to families through its social safety net programme was the most effective way to relieve VAT’s burden on poor Bahamians.
Comments
MamaSMH 8 years, 2 months ago
I find Mr. Halkitis' dismissal of calls for basic necessities - such as food, being exempt from VAT as "over simplistic" and "having the potential to seriously mislead the Bahamian people" disingenuous at best and at worst a slap in the face to every hard-working, intelligent Bahamian I know.
The example he gives of the difference between low income and high income families has nothing to do with anything - the math doesn't even make sense. 7.5% = 7.5%. I don't care how much you buy.
For him to suggest that low income families should rely on the social safety net programme instead of small relief every day at the grocery makes no sense to me at all. How does the government fund that programme? Money it gets from VAT? Don't take away people's dignity - stop taxing us instead. Thank you Mr. McKenzie for yet another illuminating article. ~SMH
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