By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Grand Bahama Chamber of Commerce has urged the Government to implement an income tax as a more equitable and progressive alternative to Value-Added Tax (VAT), with both personal and corporate income caught in the net.
The Chamber, in its recommendations to the Government on its proposed tax and fiscal reform programme, called for it to shift away from ‘regressive’ taxes, such as VAT and Customs duties, to those directly linked to a person’s ability to pay.
“VAT is a consumption tax and therefore will impact all consumers,” the report said. “Consumers at lower income levels will either have to consume less and, in some instances, may have to go without certain basic necessities, and hence stand to suffer the most deleterious effects of VAT.”
While the Government recognised this, having announced it will increase its social security spending by $30 million to counteract VAT’s negative impact on poor and lower income Bahamians, the Grand Bahama Chamber said this would also act to slash the surplus revenues generated by the new tax.
Implying that this merely confirmed the regressive nature of VAT, with lower income Bahamians paying a higher share of their income in taxes than their wealthier counterparts, the Chamber report added: “A fundamental tenet of prudent fiscal reform is that taxes should be assessed based on one’s ability to pay.
“Those with higher levels of income should bear the greatest tax burden. Conversely, those at lower income levels should pay fewer taxes. In other words, taxes should be ‘progressive’ rather than ‘regressive’.”
All this led the Grand Bahama Chamber to the following conclusion: “Rather than migrating from import duties, which are regressive in nature, to VAT, another regressive form of taxation, the Government should consider implementing a direct tax on individuals’ and companies’ income (direct income taxes) and significantly reduce, or even abandon, import duties and other tariffs.
“A shift to direct income taxes will ensure that the burden on the country’s lower income consumers is lessened, while at the same time it will broaden the country’s tax base.”
The Grand Bahama Chamber added that details revealed by ministers and officials in the VAT debate “confirm that successive governments have mismanaged the country’s economy over the past 18-20 years by allowing the debt-to-GDP ratio to increase by almost 90 per cent.
“Moreover, the crisis management measures now required (implementation of VAT and reining in of public spending) to arrest the burgeoning debt and to place the country back on a sound financial footing appear to be mandatory and not optional.”
Comments
SP 10 years, 1 month ago
Whereas income tax is without question the most sensible solution to Bahamas tax woes....
Income tax requires everyone to expose their sources of income, causing pirates in government, friends, family and lovers under the table partnerships to be exposed.
Income tax will never happen under the PLP or FNM....Too many skeletons in their closets!
TheMadHatter 10 years, 1 month ago
Apparently the Chamber is not aware of the existence of illegal workers in this country. They do not pay NIB and they will not pay income tax either.
The statement that "those at lower income levels will have to consume less ..." is exactly the point. Why should we encourage cashier girls at a food store making $200/week to have 7 children?
The more that we coddle "the poor" the more POOR there will be. It is time for them to start paying their fair share - instead of having an unfair share of children. I can only afford to have 2 children. What if one gets killed in a car accident? Then I am left with only one child to help me when I am old and feeble - whereas THEY can have 5, 6, 7 or more children to help them. By that fact alone they are NOT poor. They have more than me.
In any case, it is YOUR choice and our choice as a nation whether we want to encourage people to be poor and give them every break imaginable - or allow them to be contributing citizens who understand the value of a dollar and the cost of a baby.
TheMadHatter
ohdrap4 10 years, 1 month ago
with income tax, there will be regulations. in the bahamas, business owners use company funds to pay for cars, travel, sweerheart biils. They are not on payroll, so they can even buy food at the food store and get vat back as a business expense. no one would ever know, they could say the food was for the office workers.
these proposals make me cringe, patrol tax is more regressive than vat or customs duty.
ryan pinder is the only one who said that.
The_Oracle 10 years, 1 month ago
VAT reporting requirements give the government insight to Economic activity that they've never had. Information needed to institute Income tax. Income tax is coming regardless, hastened by the inevitable failure of VAT to provide the increased revenue promised. This road has been so well traveled throughout the ages, in many countries. None of it ends well for the people. Rich or poor. Ever.
Anfiska 10 years, 1 month ago
Taxes make our income to be essentially reduced. This is not good situation for all people who work 8 hours a day and gives almost all money to pay bills. It is useful to search ways to reduce the amount of taxes. You can also benefit with this http://www.cashadvanceloanstore.com/">solution online.
Sign in to comment
Or login with:
OpenID