TODAY, BEC chairman Leslie Miller is the Man of the Hour, and VAT is the vehicle that is going to send all of us — country included — to our economic graves.
These are the two most hotly debated subjects in town today. The high cost of electricity, which is not only squeezing the Bahamian taxpayer, but is pricing this country out of the tourist market, and VAT, which is going to hit the consumer where it hurts most — his pocket. VAT is causing the cautious business person to shelve planned investments as he waits to see what the future holds.
For a government that came to power on the promise of producing 10,000 jobs in the first year, all it has succeeded in doing is so frighten the business community that rigor mortis has paralysed the job market and increased unemployment.
VAT might be suitable for manufacturing countries, but the Bahamas is not a manufacturing country, nor can it produce enough accountants and inspectors to manage such a system. In other words, we do not have the necessary administrative practices to make VAT feasible.
“VAT: Is it suitable for the Caribbean Community?” was a study done sometime in 2006 to answer this pressing question.
“The three main arguments against VAT implementation are firstly that it may be both costly and complex to administer,” said the report. “This cost is absorbed by both the tax payers and the businesses that remit the VAT. Secondly the VAT is inflationary, and finally the VAT taxes the poor more in a proportional sense than the wealthy. The last two factors affect the poor, and they cannot be understated. Dos Santos (2002) like many others makes a strong case for the VAT by pointing out that it is a good source of revenue but makes little mention of the adverse affects this tax can have on poorer consumers and domestic producers. We find that success is typically defined by the ability of the tax to generate revenue, with consumer welfare being treated marginally.” And so the report continues.
But to turn to Mr Miller and his argument with Bahamas Electricity Corporation unionists in his fight to reduce the cost of electricity to the Bahamian public. “I never had any time for Leslie Miller before, but, by jove, regardless of my politics, I have plenty time for him now!” remarked an exasperated business person last week.
This seems to be the general consensus as public anger grows against what are now being called “double-dipping” unionists.
BEC unionists have a contract that allows them to “double dip” — at the expense of the Bahamian taxpayer – whenever they go on sick leave. In other words, unlike the average National Insurance taxpayer, BEC staff collect their full salary from BEC in addition to their NIB sick allowance. BEC is in the spotlight now for this unorthodox practice, but this was – and probably still is — the general practice throughout the civil service. It harks back to the early days of the Pindling regime when unionists would by-pass the Labour Minister and demand that they negotiate directly with Sir Lynden. Sir Lynden was so beholden to unionists that he was noted for signing almost anything on the piece of paper that they pushed across the table to him. This “double-dipping” practice could probably be traced back to those days, as can many other unorthodox practices that one would never find in a contract in the private sector.
The fight was on when Mr Miller announced that from November 1 BEC employees would no longer be allowed to “double dip” by collecting from NIB in addition to their full BEC salary. In the House of Assembly, Mr Miller called the unionists “heartless” and “selfish”, particularly when so many of their fellow Bahamians were not only finding it hard to make ends meet because of the cost of living, but were also jobless.
He told the House that despite the corporation’s $22.5 million loss in the past year, the BEC board had planned to give the staff $1.6 million in Christmas bonuses. Their behaviour has probably jeopardised those plans. He also pointed out that $11.5 million had been set aside this year for the employees’ pension fund.
He said that the corporation was half a billion dollars in debt. However, despite this in the past 10 years it had paid more than $30 million for employees’ health insurance and $54 million into the employees’ pension fund. And yet unionists wanted BEC to pay their full salaries when they are sick and allow them to collect NIB funds for the same purpose. In other word “double dip” when so many of their fellow Bahamians can hardly afford groceries and certainly cannot pay their exorbitant electrical bills.
No insurance plan is designed to make it attractive for an employee to stay at home. For example, NIB pays 60 per cent of an employee’s weekly salary when he/she is off the job for health reasons. This is incentive enough to hurry the healing process and get back to the job and on full salary. But in BEC’s situation being sick is a temptation for a long vacation – full salary in addition to a bonus of another 60 per cent of the full salary.
When Algernon Cargill became the National Insurance Board’s director he found “double dipping” in full swing. Because it was not written into NIB employees’ contracts he was able to put an immediate stop to the practice.
This is a practice that should end immediately throughout the public service. We agree with those who call it “theft” from the Bahamian public. Of course, this offending practice is written into the BEC contract.
Government should decide on a policy and make certain that in future no government contracts can contain such a clause. It is unfair on the general public who are forced to pay for others what they cannot afford for themselves.