The Tribune

By BRANVILLE McCARTNEY

Democratic National

Alliance leader

THE public is becoming irate over the July 1, 2014, deadline for the enforcement of VAT. There’s an air of trepidation around lately, and it’s not going away any time soon.

According to the PLP, the IMF has us over a barrel, and the implementation of Value Added Tax is not an option, but a necessity.

However, each country is not affected in the same way, since a lot depends on how it impacts their residents socially. The current administration doesn’t seem to comprehend the ramifications of taxing the Bahamian people at this point in time, with so many families struggling beyond belief.

While the PLP government is pushing VAT as the solution to our financial woes, they are not educating the average citizen or being honest about the potential pitfalls of this regressive tax.

They must prove to taxpayers that studies have been done comparing nations with similar economies and populations, by looking at the ratio of upper, middle, and lower classes, and how their quality of life has been affected since the implementation of VAT.

This should include how VAT impacts industry, investment, tourism, unemployment, currency stability, crime, minimum wage, cost of living, the size of government and the public service sector.

It must be challenging to look at parallels when no two nations are identical, but it’s something that hopefully has already been done by this administration, rather than diving headlong into something which could be disastrous economically and socially.

These were the words of our Minister of State for Finance in February of this year: “Notwithstanding the fact that the government inherited some $100 million in unpaid bills left behind by the previous administration, today the government reiterates its commitment to no increases in taxes on the backs of the Bahamian people.”

We in the DNA ask how can there be such a radical change in this government’s outlook for this nation in nine months that it is compelled to break its promise?

Now we find ourselves being forced to accept a tax known to have a negative impact on the middle and working classes, though numerous alternatives have been put forth.

The Minister of State for Finance also stated that: “The government will also enforce fiscal discipline across all government ministries and public corporations. The Ministry of Finance will be restructured to strengthen its organisational capacity to facilitate this.”

In this regard, the DNA states that recent expenditures on trips overseas seem to suggest we should not have taken that statement seriously, regardless of how adamantly they claim funds in the annual budget were set aside for travel expenses, in order to expedite the nation’s business.

We in the DNA ask, did the Council of Economic Advisors promised in the PLP Charter of Governance ever materialise and did they give a unanimous thumbs up on VAT?

What irony that employees and businesses feel uncertain about the future, while the aforementioned group (if it exists) was mandated to promote economic growth and stability!

The rising cost of electricity is a major problem for private households and businesses alike, yet once again this government has done an “about face”, and VAT will now be added to our bills, essentially doubling up on a service that has already been taxed.

The lengthy PLP Charter of Governance doesn’t seem realistic, while plodding through the foolproof strategies and good intentions.

Most of us know this administration can talk the talk, but expecting them to follow through is a pipe dream. Reneging on their promise of no increased taxes, and pushing VAT on us should not come as a surprise.

In their Charter, they stated their intention to lower the cost of electricity (more than once), yet we can expect to have VAT added to our bills next July.

We were promised increased efficiency at BEC which has proven to be false considering the number of blackouts many communities have suffered over the summer. The $30 million in lost revenue the PLP is afraid of losing if VAT is not charged on electricity bills, could easily be recouped by legalising, regulating and taxing the numerous web shops.

A substantial amount of money was wasted on a gambling referendum which turned out to be completely misleading for many Bahamians.

Web shops are multiplying daily as a result, while the Gaming Bill has been tabled, so these businesses can’t be taxed.

This is a means of collecting revenue that the government seems reluctant to pursue, along with a National Lottery.

After acknowledging that certain food items will be exempt, one must still consider other necessities.

There seems to be no mention of clothing or household supplies.

To an impoverished family, items as basic as a broom or mop may not be in the budget with 15 per cent tacked on.

What about men’s razor blades and personal toiletries for women?

Will shampoo be exempted and considered the same as soap? What about deodorant and toothpaste?

For some families, simply affording food items is already challenging!

Imagine a family with several children of school age. Consider the mother whose budget is already stretched, trying to calculate the cost of uniforms, books and other supplies after 15 per cent has been added to her bill.

There are numerous possible unfortunate scenarios for the middle class and poor.

Minimum wage must be revisited. Then we get into the problem of illegal workers in the private sector whose earnings leave the country.

Will the 15 per cent be levied on Western Union? What about commission-based salespersons?

The added tax on the price of the merchandise may discourage customers and would commission be calculated before or after VAT?

There are simply too many unanswered questions.

In the end, I expect many Bahamians will opt to make purchases via the internet, cutting out local vendors.

Some persons on social media are already upset at perceived increases, which they put down to anxious business owners testing the waters.

Increased shopping online and trips to the US will mean less revenue for government and more unemployment if businesses close down.

The PLP should not ignore the electorate on this issue. If they do, and VAT causes further hardship for the Bahamian people, the fat lady is sure to be singing.