The Tribune

IN the letters column on this page today Garth Buckner, who was on the board that privatised BTC, has responded to the Prime Minister’s invitation for an alternative plan to VAT. What Mr Buckner writes makes a good deal of sense. We recommend that Mr Christie and his government give it the consideration that it deserves.

What this government has to appreciate is that one shoe does not fit all and because VAT works in industrialised countries, it does not mean that it will be the answer to the Bahamas’ problems. The Bahamas is not a manufacturing country trading in goods in which a paper trail of transactions can be easily followed. The fear of VAT alone has already gravely affected the growth of our economy and made a nonsense of the PLP’s 2012 election promise of 10,000 more jobs within weeks of coming to office. Too many Bahamian business people are talking of reducing staff, not expanding. And in the natural course of things, contraction means unemployment lines with grow.

“Empirical studies have shown the interlinks between the VAT performance of a country and its level of development,” said a World Bank paper on the subject. “The revenue gains from VAT are likely to be higher in an economy with higher level of per capita income, lower share of agriculture, and higher level of literacy. VAT proves to be an efficient tool for revenue collection; its performance, therefore, has direct impact on fiscal mobilization, macroeconomic stability, and development.”

“Compared with alternatives in indirect taxation, the VAT has more revenue potential: it is generally more broad-based and entails a trail of invoices that helps improve tax compliance and enforcement,” said the World Bank.

VAT was first introduced in France in 1948. It was designed for highly educated, industrialised countries with its “trail of invoices that helps improve tax compliance and enforcement”.

There are many reasons why VAT will not be successful in the Bahamas and the easy “trail of invoices that helps improve compliance and enforcement” is not such an easy trail in many Bahamian businesses.

Neither are there enough qualified Bahamian accountants to make such a system work.

If this government cannot collect taxes still outstanding on it books, where are they going to find sufficient compliance experts to oversee a VAT system?

And don’t let anyone forget that our education system is turning out too many D grade students for the Bahamas to be classified as a highly educated nation.

However, the greatest grumble heard from Bahamians is the failure of government Ministers to set the example by cutting back on their spending.

“It’s easier to save money than it is to make it,” observed one angry citizen. “They talk about taxing us, but they show no example of saving our money so that our debts can be paid. We certainly are not going to be taxed so that they can continue travelling the world!”

This complaint is getting louder daily, drowning out any possibility of exploring the merits or demerits of VAT. The only group apparently stone deaf to the grumble is the Christie government.

On planning his cabinet, Mr Christie explained its large size by effectively saying he needed more hands to help him solve the complex problems facing the nation. After more than a year in government, the increasing blunders have proven that these extra hands should be sent to the backbench and save the taxpayers’ dollars.

Even his delegation to Nelson Mandela’s funeral brought out the critics.

“I would have thought,” wrote one, “the correct thing to do would have been for the Prime Minister to have gone to this funeral with his wife only – leaving behind the others. And, yes, I guess we foot the bill for this too!”

Considering the times, it was insensitive of Mr Christie to include a personal photographer in his delegation. Even President Obama was smart enough to take his own “selfie”. At least he could put it in his back pocket at no expense to the American taxpayer.

It seems that the Christie government is completely oblivious to the anger of many Bahamians on this matter.

Government’s first waste of taxpayers’ money — more than $1 million – was to hold a controversial referendum on gambling. After the bungled referendum the Constitutional Commission informed government that a referendum was not required to settle the gambling issue. All government had to do was go to the House, and if it were decided that Bahamians were to be allowed to gamble, deletion of Section 50 of the Lotteries and Gaming Act would have settled the matter.

But with eyes mainly on the 2017 ballot box and not on what was best for the nation, government did not want to stir the ire of the clergy by voting to allow Bahamians to gamble.

It was too big a voting block to lose. And so they decided that the people should settle the matter by referendum. This resulted in a no vote on gambling, which government interpreted as protecting web shops from taxation.

And so the webs – which the public voted to shut down because they were illegal – are still flourishing. They won’t be taxed, but Bahamians will be taxed to pay off the national debt — and the million plus added to it by an unnecessary referendum.

This is another issue that has stirred public anger — and should justify a reduction of the cabinet. Those extra hands are certainly fumbling too many issues.