LOW public turnout to learn about the new Value Added Tax (VAT) implementation has prompted the Ministry of Finance to invite the media houses, talk show hosts, and college students to participate in one-on-one dialogue about the impact of VAT.
On July 23, Financial Secretary John Rolle held a VAT presentation in the College of the Bahamas’ Harry C Moore Library Auditorium.
Mr Rolle introduced the role of Government and its relationship to the business community in the process of collecting taxes from consumers and paying the collections back to the Government in credit instalments.
Mr Rolle also explained the introduction of new legislation for the VAT to be introduced later this year and the possibility of competition and anti-trust legislation being added to VAT in relation to URCA’s responsibilities.
In addition, Cleveland Eneas, a radio show host and participant, explained the need for Government to provide small scale accounting services for small business owners who need assistance in keeping their finances straight.
Comments
Collin 10 years, 8 months ago
Who knew about it?
jerzy 10 years, 8 months ago
The questions that Bahamians need to ask are:
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
holymoly 9 years, 4 months ago
The financial field has developed a lot in the last decade. The Value Added Tax (VAT) implementation seems to be useful but it won't necessary lead to the Bahamas economy development. There are a lot of people who are running businesses in Bahamas and the majority of them have to pay interest rates for credits opened to different banks such as https://www.ccbg.com/">https://www.ccbg.com/ and once with the VAT implementation, their taxes are increasing which is not a good think.
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