By Dr KIRKLAND PRATT
The year 2014 will see a very different Bahamas. Very soon, Bahamians will come to comply with Value Added Tax (VAT) and every social and financial implication that will be imprinted on the Bahamian public in the wake of its tepid introduction. Loosely defined, VAT is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution. In early November of this year, Prime Minister Perry Christie told the Tribune, “We [the government] require additional revenue to be able to meet debt servicing obligations. We need additional revenue to be able to have a resurgence in the economy; we need additional revenue for infrastructure development. Moreover, on VAT’s initial proposal Minister of Finance Michael Halkitis indicated that the government needed to raise some 200 million dollars in revenue to offset budgetary obligations.”
Suffice it to say, much is abuzz in the Bahamas on the issue of VAT enactment proposed before the next fiscal year. For the lack of a structured educational initiative, much is left to hearsay and conspiracy theories. Notwithstanding, increased taxation on an already seemingly crippled economy with national unemployment at 16.2 %. More curious are the statistics for the youth demographic (15 – 24), the group who most actively seek employment; and the group who represent the largest number of criminal offenders whose overall rate was 30.8% (2013 May Labour Force Survey Published: Friday October 25th, 2013).
How will we fare psychologically after the introduction of VAT? VAT will be determined by a number of complex variables, including tax morale. Tax morale (or taxpayer ethics) speaks to the norms of behaviour governing citizens as taxpayers in their relationship with the government”.
Likewise, and in this instance, the Bahamas government has decided on a regressive tax that by virtue of its make up, takes a larger percentage of a lower income and a smaller percentage of a higher income. This means that the grass root supporters of the governing party, who typically find themselves in the lower socioeconomic tier, may indeed experience a largely collective sense of marginalisation by the policies of those they so fervently elected to office to protect them.
Subsequently, trust then becomes an issue, which will negatively impact typical sweeping support for future legislative constructs. Where trust in government is void, citizens sanction acquiescence to systems in ways that often time prove a non-starter for the community and progress. The reliance on connections to shortchange revenue collection (customs etc.) and lack of productivity within the labour force may experience new life as the suppressed usually always find ways to pay themselves. With the growing dissent for the spending of this government on large delegations, parties, outriders, vehicles, ineffective and unproven programs many are left with a bitter taste in their mouths steeped with even an increased sense of distrust. Many are asking: “where mines?”
Truth be told, enacting true and progressive leadership in an environment of mistrust is close to impossible in democracy.
For those who found themselves on the other side during the election, the dubious temptation to showboat and project the ‘oh I told you so’ finger-wagging may be but a fleeting bit of energy expending as it is and will become clear that all (gold or red) will feel the pinch where it matters most: the wallet.
Conversely, just what are to be the psychological implications of Value Added Tax? Perhaps in its current tabling and considering the time frame in which Bahamians must come to know VAT and its tenants coupled with the question of its processes and relevancy; I’d suggest that VAT may contribute to fear, anxiety, a negative posturing, inflamed clandestine posturing and a potential devaluation of esteem of the lower socioeconomic demography who struggle daily to make good of two coppers.
Are you ready for the potential psychological impact of VAT? Is your neighbour? Ask around.
Keep thinking though, you are good for it!
• Kirkland H. Pratt, MSCP, is a Counselling Psychologist with a Master’s degree in Counselling Psychology with an emphasis in Education. He lectures in Industrial Psychology and offers counselling and related services to individuals and businesses. For comments, contact kirklandpratt@gmail.com.
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