The Tribune

EDITOR, The Tribune.

I have noted the reports of complaints by certain business owners to the increases in certain taxes proposed in the 2013/14 budget. The most important change relates to an increase in the turnover tax (business license fee).

There are two important observations to be made in this respect:

1) The turnover tax is not a tax on business income. It is, in fact, a tax on the customer. Businesses therefore are required to collect and remit it to the government. (The proposed VAT is the same).

Therefore, except in the case of gas stations (which are subject to price controls), and banks, which have fee increases and foreign dividend stamp taxes to absorb, the increased turnover tax will be passed through to the customer. As such, business owners and newspaper headlines are misrepresenting the target of these taxes.

Of course, price increases and inflation are issues of concern for the general public.

2) Our increasing tax burden is related to the massive overspending of previous years, particularly since the start of the recession in 2008. This increased spending was fully supported by many of the same businessmen who are now critical of the tax increases.

They supported the spending because it added economic stimulus during a very slow period, and their businesses were the beneficiaries. But the bill must now be paid.

Some have asked why business income has been exempted from bearing a share of this obligation, and this is a legitimate question.

While growth is the ultimate cure for what ails us, The Bahamas has badly mismanaged its finances and now no longer has the benefit of time. It must act immediately to restore a sense of order in its public finances. This is a painful exercise, but unless there is constructive advice on increasing growth coming from the business sector, what is the point of objecting now.

SHAYNE DAVIS

Nassau,

June 19, 2013.