‘Payroll Tax Not A Viable Option’

BAHAMIAN workers would face grave reductions in take-home pay if a payroll tax were implemented instead of a Value Added Tax (VAT), the three leading government voices in financial affairs, including the Prime Minister, agreed.

“You would need a payroll tax of 20-25 per cent to equal what a VAT of 15 per cent would generate,” said Prime Minister Perry Christie.

The Prime Minister was addressing a national conclave for Chambers of Commerce at Breezes on April 2.

Asked if the government had considered alternatives to VAT, the Prime Minister said absolutely, and was still listening to and talking with people. But a payroll tax would penalise the working individual, he said, a conclusion echoed by Minister of State for Finance Michael Halkitis and by Financial Secretary John Rolle.

Both said government had plugged payroll tax into a model, and the results showed the impact on the economy, including smaller take-home paychecks, would be far greater than the anticipated 5-6 per cent cost of living increase that will accompany the first year of VAT.

According to government’s figures, it would take a 16 per cent salary deduction to equal what a 10 per cent VAT rate across the board would generate. The deduction would have to be between 20 per cent and 25 per cent to generate as much as a 15 per cent VAT rate would net.

“The net positive impacts (of VAT) outweigh the net negative impacts,” said Mr Halkitis, noting that the Bahamas still does not have capital gains tax, estate taxes, corporate or individual income tax.

Minister for Financial Services Ryan Pinder said the Bahamas remains one of the lowest percentage tax regimes in the world.

The Bahamas rate of taxation to GDP is 16 per cent, he said, while US taxpayers cough up 32 per cent of the gross domestic product in taxes every year.

“The real question,” said Minister of State for Investments Khaalis Rolle, “is can we afford not to do it?”

Warning of the increased scrutiny of credit rating agencies, he said: “It only takes one person, one suggestion that the Bahamas is not a good place to invest, not a safe place to put your money, and guess what happens – it not only impacts the government, it impacts everyone. We have only one chance to get it right.”


Questionmark 6 years, 5 months ago

How about, before we consider taxes we consider some kind of spending control on government and its agencies, tax the number men and stop them from giving out mortgages and other non taxed business that are FLOURISHING while the government does nothing… or call another election so this madness can end. ITS FRUSTRATING!


proudloudandfnm 6 years, 5 months ago

Bahamians better stand up now. If we ever actually do need new taxes we most certainly do not want the PLP implementing it. The PLP are pathological, they simply can't do anything properly. All we need from this party is for them to serve their term and get out of office so life can return to some kind of normalcy. The Bahamas simply cannot trust the PLP at anything....


BahamianAway 6 years, 5 months ago

Why must everything be done on the backs of the Bahamians who already work hard as it is to make ends meet. They are talking about implementing VAT, however; I've heard nothing about raising minimum wage. Let's tax people but not raise their pay so at least they can continue to afford what they did before. DAMN IT!! This make me so angry...I need Bahamians to get their heads out their flipping buttholes and realize what's happening to them.

This country is going to hell and people are worried about the wrong things...let have a birthday party for Will Packer and his celebrity friends while the simple man figures a way to pay the mortgage, light bill, water bill, and by groceries and gas all while automatically losing 15% of every dollar.

WISE THE HELL UP PEOPLE!!!! Bahamians need to get their priorities together.


ohdrap4 6 years, 5 months ago

The proponents of payroll tax are wrong.


So, as i said before, only the schlemiel on payroll are affected. The payroll tax will always be twice the VAT vat to generate the same revenue.

I did not know whether to laugh or cry when this tax coalition says "they need proof" that the payroll tax would have to be larger. Go learn your percentage folks.

Further more, they cant deduct from civil servants because 70% is gone already.

And, if this is really a tax on employers, who gonna pay the payroll tax for civil servants. aha, joe public will continue to subsidize these fat cats who never even paid the full rate of national insurance till a short while ago.


sheeprunner12 6 years, 5 months ago

You are quite right about the impact of salary deductions on the average Bahamian worker............ I will bet it is at least 60-70%.

Secondly, this GST (not VAT) will do at least one good thing........... it will tax new streams that have never been taxed (services). Most poor people will hardly be taxed anyway because they make very little use of medical, legal and business services like the rich.

The biggest losers again will be the middle class


BahamianAway 6 years, 5 months ago

No matter where you go the biggest loser are always the middle class...I don't know any economy that is set up to protect the middle class. Making to much money to qualify for government assistance, yet not making enough money to get a viable tax break.

So as usual they get stuck in the middle...the same will happen once they implement VAT. They need to look at making things easier for the middle class- when do we get a friggin break.


TheMadHatter 6 years, 5 months ago

The PM is right. We already have a payroll tax, called NIB. We know who pays it and who doesn't. The same people who don't pay now, won't pay then.

VAT should be implemented at 5% (or even 1% the first six months), and bread basket items should be included - because those same people who don't pay NIB are the same people who won't be paying any VAT cause all they buy is bread basket. VAT should also be DOUBLE on monies sent "down south".

If they're not gonna put VAT on bread basket items - then the Law should be amended to say that in a food store the computer will alert the cashier if 80% or more of a checkout is bread-basket and then the cashier is required to hand that customer a free box of condoms free of charge. After 10 years, the economy will start to improve.



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