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FNM planning to repeal parts of tax

FNM leader Hubert Minnis

FNM leader Hubert Minnis

By AVA TURNQUEST

Tribune Chief Reporter

aturnquest@tribunemedia.net

AS the government works to fine-tune its new tax, FNM Leader Dr Hubert Minnis yesterday said his party is forming a plan to repeal certain categories of value added tax if it wins the next election.

Dr Minnis said that a special commission has been established to look into

several categories where VAT is applied, namely utilities, children’s clothing and bread basket items.

He added that the commission is also considering repealing the VAT charge on the management of pension funds.

“This government is again showing no respect for the poor or middle class,” he said.

“With an already shrinking middle class and poverty increasing, to further increase taxes (it) is an insult to the poor and middle class.

“The problem is erratic spending and poor collection of our taxes,” he added. “These are issues that must be addressed and the VAT taxes will cause great suffering in the country.

“The FNM has a committee to look into repealing sections of VAT, to protect certain areas like electricity and other utilities generally, such as water.”

Dr Minnis forecast that increases to electricity costs will lead to more layoffs.

VAT is charged at a rate of 7.5 per cent on most goods and services, with few exemptions.

Since the new tax was implemented last week, there has been widespread concern from consumers and the business community over fears of price gouging or fraudulent tax application.

Yesterday, FNM Deputy Leader Peter Turnquest warned that there could be possible legal troubles for the government for levying the tax on service transactions in Freeport, the city regulated by the Port Authority under the Hawksbill Creek Agreement in Grand Bahama.

The East Grand Bahama MP explained that although the agreement does not specifically address services, the government’s “narrow position” was likely to be challenged.

“I support the Port Authority’s position,” he said. “The government’s position that services are not included in the Hawksbill Agreement is a narrow position. At the time it was written, nobody would have thought the government would come back and make that suggestion. It is clear that the intent was for the area to be free of all taxes. The government is taking liberty and I look forward to the way the Port Authority handles it.”

Mr Turnquest added: “Any tax they collect, they should put in escrow. It’s likely that they will have to pay them back.”

Mr Turnquest also criticised comments made by Deputy Prime Minister Philip Davis, who told reporters that Bahamians should accept the new tax just as they adhere to taxes while shopping in the United States.

“The difference is when you pay taxes,” he said, “you expect service accountability and responsibility. You want to know where your tax dollars are going, and that is the biggest complaint. We need fiscal responsibility and transparency, and a follow through on how these taxes are used to reduce the debt.”

Comments

proudloudandfnm 7 years, 7 months ago

Not good enough Mr. Minnis.

You voted no. You must have had a reason to vote no. Repeal it completely and come up with a better plan...

Here's a hint. We need to get rid of hundreds if not thousands of government jobs. We do not need anymore useless corporations. Dissolve as many as you can. Get rid of Bahamasair and ZNS and BEC. Collect some taxes we had prior to the worst day in Bahamian history...

If you voted no then you have no reason not to repeal, you must have had some idea of an alternate....

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empathy 7 years, 7 months ago

Mr. Minnis you and your advisors need to read up on VAT and meet with the government's New Zealand Consultants before proclaiming your plan to repeal certain aspects of it make sense. In fact they have answers and suggestions that address your very proposals. Including addressing Social Services to offset the struggles the poor will face upon VAT implementation. Following their advice and the NZ GST as close as possible may indeed be your best suggestion.

That said, the previous commenter brings up an excellent point regarding government's spending. We Bahamians have no "choice" when it comes fiscal responsibility amongst our political parties. All seem to be in the "promising business". Unfortunately none hail limiting government spending, promotion of private business expansion and elimination of monopolies as a priority.

Mr. Minnis, you are the Leader of the FNM, act like it!

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ThisIsOurs 7 years, 7 months ago

Irresponsible, get your comprehensive plan together and then speak to the Bahamian public

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birdiestrachan 7 years, 7 months ago

Dr. Minnis will repeal nothing, What is his solution to the fiscal problems the Bahamas is facing , besides collect the monies owed. His party could not collect the back taxes during the fifteen years they were in power. so it must not be that easy. Minnis wants to be PM but he has no vision. none at all.

It must have taken much courage to implement VAT because it is not popular and Minnis wants to use it to advance himself, with no regard as to what is best for the Bahamas.

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chairarranger 7 years, 7 months ago

Exclusive shelf pricing of goods does not make VAT smarter.

Canada does not have an equivalent consumption tax regime to ours. Canada has both a value added tax plus variable provincial sales taxes levied on the same products and services, and in some cases a harmonized (combined) consumption tax of varying rate and reach depending on the province, and a wide range of tax exempted goods (exempted from one or another or all of the consumption taxes).

We have a VAT only and no sales tax = a single rate, no variation, consistently applied, no exemptions, no provincial differences.

Starkly different to Canada's two types of consumption tax on the same goods and services = a multitude of rates, wide variation, inconsistently applied, many exemptions.

We should expect more from BFR representatives who are commenting here than simply a repetitious and misleading mantra, comparing apples with oranges, and suggesting that the solution to almost all VAT issues is simply to require customers to always carry pocket calculators when reading a price tag on a Tommy Hilfiger shirt, so they can compute exactly how much the retailer (who is neither young nor particularly savvy) will demand from their wallet at the cash register.

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TruthHurts 7 years, 7 months ago

"Minnis does himself a disservice with these 'from the hip' comments on VAT."

These goons think Bahamians are gonna continue to entertain their need to be seen and heard. No More! If you don't have anything 'solid' to bring to the table (argument) TAKE A SEAT!

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pat242 7 years, 7 months ago

It is obvious that Dr Hubert Minnis is playing politics with the Bahamian people. He agrees with V.A.T and has no intention to decress or alter anything. This is the same man who spoke out against V.A.T saying it is going to kill the econemy and drive the already poor into povety. Now if he wins he want to alter V.A.T, something is wrong with this picture. Either he is or against V.A.T.

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TalRussell 7 years, 7 months ago

Comrades, unlike an opposition party never before holding elected governing office, the red shirts have had 15 years of an inside tract to the financial constraints they will face, if reelected as government. Minnis must know that after making it from opposition back to running the government, they will plead ignorance - that because of PLP's monetary maneuverings, the finances Bahamaland were too poorly managed to even consider repealing ' for the time being" any meaniful part VAT.

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solejordan 7 years, 7 months ago

Deputy Prime Minister Philip Davis, who told reporters that Bahamians should accept the new tax just as they adhere to taxes while shopping in the United States.

first off things are much affordable even with taxes in the USA

secondly we are already being taxed out of our minds, so u idiots decided to add tax to another tax? really smart. So if this doesnt work or doesnt bring necessary funds in whats next? Go up on the rate then income tax? Where's my paycheck going though?

we're just pricing ourselves further out of the competition

Collect what's owed properly if you can even do that, which you cant and it won't be a need for additional taxes.

side note if gas is dropping worldwide how is it that we went right back up again?

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TruthHurts 7 years, 7 months ago

Yup! I agree! That's exactly where we're heading. I can see it now. Mismanagement of the peoples money once again. Then tax increases then some time down the line INCOME TAX! Oh Boy! Can't hardly wait! : (

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chairarranger 7 years, 7 months ago

"The whole country is more competitively priced" by not telling a customer what the total price of the product is until they reach into their wallet at the cash register?? How does this make a country's goods more competitively priced than the neighboring country? The customer is not stupid.

Why not make everything "exclusive" of the ticket price...using your logic the Bahamas could be the most competitively priced nation on the planet.

Picture yourself buying a Nautica sweater at, for example, His Fashion down on Windsor Field Road. You see a ticket price on the rack of $75. You try it on, it fits, you have $80 in your wallet, you head to the cashier only to be told "That will be $103.20 please."

"We price everything exclusive of some costs of production. So thats $75 for the sweater, plus 4% for stock storage, handling & delivery, plus 11% for promotional advertising that might have gotten you into the store, plus 5% for contribution to instore lighting & utility bills, plus 8% for staff wages associated with selling this item to you, plus 7.5% for value added tax on the whole amount. A bargain, wouldn't you say?"

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Alex_Charles 7 years, 7 months ago

playing politics. No one is going to repeal sh!t or alter anything. If you buy this crap then you're a moron and every reason why this country is in the position that it's in right now. with VAT we are now well ahead as one of the most expensive countries in the region and by raising our minimum wage it will get worse. Money will continue to fly it's way out of the country now, but this is what we deserve for maintaining this slack form of governance for decades.

Minnis is not the man for the job. But we don't get to elect our leader do we? that is decided for us.... like everything else in this country. but i digress

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chairarranger 7 years, 7 months ago

The tax here is inclusive because we have one VAT only and no additional sales taxes. A single rate, no variation, consistently applied, no exemptions, no provincial differences. Unlike Canada which has a mixed consumption tax model. Unlike the USA which has a sales tax not a VAT.

Every breath that is wasted by the retailers federation arguing against inclusive pricing (which has already been adopted by government, is already in effect in some stores, and will universally take effect by Feb 28) is lost time that could otherwise be spent re-pricing floor stock and lobbying strongly for fiscal responsibility and freedom of information laws to protect taxpaying consumers and business from the excesses of unrestrained government spending.

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chairarranger 7 years, 7 months ago

A 2009 report by the Canadian Tax Foundation found that Canada was the only VAT/GST country in the world in which prices were advertised and ticketed exclusive of tax.

Cash register receipts show the VAT being paid, but the price advertised is the price that one pays. It also noted that in many countries, consumer protection legislation requires that prices always be shown tax-included as part of honesty in advertising principles.

And according to the International VAT Monitor report (produced by the International Bureau of Fiscal Documentation, October 2009): "A GST or a VAT is in place in every OECD country other than the United States, and in virtually every country in the world that has a market economy (more than 140 countries). In all or virtually all of those countries, prices are advertised tax-included."

Canada was the exception. And that is because it has a mixed model consumption tax of VAT plus sales taxes with provincial variations in rates and numerous exemptions. All of which The Bahamas does not have.

You need a new example. And to embrace reality.

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chairarranger 7 years, 7 months ago

No kisses required. This is not Paris (but if it were then the price of your kiss would be shown VAT-inclusive, of course, as it is the law in France too).

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chairarranger 7 years, 7 months ago

Little wonder some retailers stand accused today, by dozens of customers, of hiding price increases through price gouging since the VAT was introduced nearly one week ago. Little wonder when their advocates think that sales can be "boosted" by hiding the true cost of a product on the shelf and in promotional advertising from a consumer until they reach the cash register.

With your arguments and international examples for maintaining the pretence of exclusive pricing collapsing all around you, this repeated mantra of yours is surely becoming embarrassing to read back at yourself again and again, and to those funding your organization.

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chairarranger 7 years, 7 months ago

Canada does not have a consumption tax model like ours. FNM knows this. The United States of America does not have a consumption tax model like ours. FNM knows this too. You are still asleep to these facts and the fact that inclusive pricing is used in every country in the world that has the consumption tax model that we now do. That is why FNM will not alter the policy of inclusive pricing that PNP has put in place. So yes, we don't need to reinvent the wheel. Your wheel doesn't go anywhere, just around in circles.

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chairarranger 7 years, 7 months ago

We are not crafting anything. We have a single value added tax, its already in effect. The rules have been written, adopted, and are one week into implementation. The points you make are about as valid as your misuse of Canada as an example. You have long since lost the debate on exclusive pricing. And you've clearly never been to Canada.

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chairarranger 7 years, 7 months ago

As a paid spokesman for the local retail industry, what have you said publicly, with your real name attached, about the companies being complained about for price gouging at the moment?

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chairarranger 7 years, 7 months ago

So you've said nothing publicly on the record then. You've done it all (including the personal attacks in lieu of factually comparable examples) 'exclusive' of your name and 'exclusive' of your position, and you then turnaround and claim you are being ignored by government. Well no surprise there, they cannot hear you if you hide in the bushes. Look where exclusivity gets you.

VAT exclusive pricing has been soundly rejected by all countries (140+ of them) with the same consumption tax model as we have now introduced. Canada has a different model to us, a mixed consumption tax model, incorporating both a value added tax plus a variable provincial sales tax plus exemptions.

It took a very long time for you to understand the difference between a VAT and a sales tax during the lengthy period that you relied upon the USA being an example of an equivalent consumption tax model to us (which of course its not either). So I hope you can understand now, after repeating it half a dozen times, what a mixed consumption tax model (e.g. Canada) is compared to what a single rate/single type consumption tax model is (e.g. The Bahamas).

Bahamians have woken up. They have woken up to inclusive pricing for nearly seven days now and, irrespective of the merits of having a VAT or not, they know inclusive pricing is here to stay. The only people who haven't woken up to it yet are a small handful of retailers who are at odds with every other retailer in the world who operates successfully in a single consumption tax model market economy. One in which consumers - your customers - know EXACTLY the price they will pay for your goods from what they see in the advertisements and on the pricetags, and EXACTLY the amount that goes to government in tax from their receipts. Without needing to carry a pocket calculator out shopping with them.

If you are really so wedded to your exclusive pricing because you believe its in the interests of your customers, why do you not just price your products on the shelf with the tax amount also shown? For example, an individual pricetag simply stating "Price: $129.00 (includes VAT of $9.00)"

I now look forward to hearing all your reasons why this is simply impossible, and how nobody understands retail but you, and how we must all wake up, out of the box, and understand that pricetags that have transparency, honesty and accuracy are simply unachievable in our completely unique economy that is like no other.

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chairarranger 7 years, 7 months ago

Why would customers, tourists or locals, need to calculate anything in their heads if your pricetags stated:

"Price: $129.00 (includes VAT of $9.00)" ?

You seem deeply fearful of transparency.

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chairarranger 7 years, 7 months ago

The tax isn't hidden on this pricetag:

"Price: $129.00 (includes VAT of $9.00)"

Its right there, $9.00, on the item, in black & white (or color if you prefer).

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chairarranger 7 years, 7 months ago

When all arguments are lost you resort to the old "there is no affordable technology that will do it." Well, not according to millions of retailers in over 140 countries who have no difficulty whatsoever with an inclusive VAT, and who have every label imaginable to ensure their customers are given accurate pricing on the spot.

The label I suggest for you is one that clearly, transparently, and legally states:

"Price: $129.00 (includes VAT of $9.00)"

How you have already managed to discover point-of-sale technology that enables you to print an actual paper receipt instore must be a source of daily marvel to you.

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chairarranger 7 years, 7 months ago

Compliance is and has always been a cost of doing business. The government didn't locate or supply your business with software or journals in which to record and account for things like your payroll taxes when you started out, or the ink and paper required for issuing receipts, and of course they won't do that for VAT compliance either.

There are already software systems on the island and in 140+ countries in the world, including I imagine the UK, New Zealand, even the oft-quoted Canada, that can produce now, or after minor modification, pricetags and shelf stickers that clearly state price plus tax. In fact some pricetags even do the unthinkable and state:

"Item: $120.00 + VAT: $9.00

Total price: $129.00"

Three figures! - to suit you, to suit the government, and to suit the single most important party to the transaction: your customer. Back to reality indeed: VAT-inclusive pricing, which both major political parties endorse, supported by the overwhelming international experience of 140+ countries all of whom require it in single consumption tax model revenue collection, in the interests of themselves, in the interests of transparency for consumers, but alas not in the interests of every single retailer or retail lobby group. But that's the nature of almost every type of tax - they are an unwelcome imposition.

Anyhow, you're clearly not terribly inconvenienced by re-pricing all of your own stock correctly, otherwise you wouldn't have all this time to complain about one simple mechanical aspect of VAT implementation that has already been adopted. Other retailers have already managed to do so with barely any fuss.

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chairarranger 7 years, 7 months ago

We agree on one thing then: History will be kind to one of us!

I wish you no ill will: I am not your enemy.

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chairarranger 7 years, 7 months ago

Yes, I know exactly what political outcomes a government achieves by inclusive pricing, but its a consequence, not a principal driver of the policy, as I outlined in response to a comment of yours in another thread. The pricing decision is driven by achieving efficiency in tax policy implementation and administration. Efficiency for government, for it is their tax, for their benefit. The bureaucrats write the mechanics of the policy, and it was the strenuous advice of the bureaucrats, expert consultants and the experiences they would've drawn on from over a hundred previous VAT implementation programs around the world that resulted in the final VAT rules which included your much disliked mandated inclusive pricing. This is how government policy formulation actually occurs.

So I don't believe a constant stream of insults across a wide range of forums and media, both in name and under assumed anonymity, assists lobby groups to achieve influence.

I have been careful and circumspect in addressing VAT issues. I have not offered my view on the merits of having the tax, on the government or respective political parties, on ordinary members of society, on the legitimate (or otherwise) role of taxation, or on the motivations of politicians. I have not overtly insulted them, I have not made side references to them, nor have I indulged in rage or personal attack or made sweeping or alarmist statements about the government administration or the nation's future. And without wanting to sound pious here, I really do think that in order to positively and constructively achieve medium to longer term influence, this softer, moderate approach, where the individual battles are carefully picked rather than fighting the entire war on all fronts, is the direction an organisation like yours should take if its to be regarded as anything more than a squeaky wheel. A siege and attack mentality never achieves a great deal. It most certainly does not achieve influence on policy makers and those who ultimately determine how implementation should occur. I wish you good luck.

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