The Tribune

By RICARDO WELLS

Tribune Staff Reporter

rwells@tribunemedia.net

STATE Finance Minister Michael Halkitis yesterday applauded Prime Minister Perry Christie’s efforts to clarify the collection and allocation of Value-Added Tax (VAT) revenue, asserting that the government must reassure voters that “nothing nefarious or untoward has transpired” and that it is being transparent.

In an interview with The Tribune moments after Mr Christie addressed the House of Assembly on the topic, Mr Halkitis noted that the “full court effort” put on by the government yesterday had more to do with correcting misconceptions and untruths, rather than “building up political points”.

The Golden Isles MP, referring to Mr Christie’s lengthy presentation on VAT and the launch of a government website dedicated to the issue, said the nature of the tax has placed the government, its spending and miscellaneous actions all “on the firing line.”

“People want to know,” Mr Halkitis said outside Parliament yesterday. “Initially there was this perception by the public that VAT would be placed in a separate, distinct pot and be exclusively used to pay down the debt.

“What I have been trying to explain to the public is that it works to pay down the debt, but through a process. A process of eliminating deficits and having to borrow less.

“Now, it is our job as a government to explain these things to the Bahamian people and so, if there are questions that remain, we have to explain again or find different ways to explain it.”

Mr Halkitis said the Christie administration wants to ensure Bahamians are aware of three main points: it is collecting revenue; that revenue is directed to a government bank account, one from which expenditure has to be approved; and finally, there is a system whereby an independent Auditor General can at any time go into any government revenue agency and perform an audit.

“Nothing nefarious or untoward has transpired. No panic is necessary because everything is being done in a transparent way,” he added.

“Yes, people are right to question the government’s priorities. They can very well say that they don’t agree with the way the government is spending. But what we want to do is dispel any notion that there is something missing or some nefarious act going on.

“With this new form of taxation, because persons can now look at their receipts and see a tax actually coming out, people will have questions and concerns.

“There is now heightened interest in government spending and revenue because everyone can now draw direct lines from their finances to the finances of the country. But what we always sought to do was to be as clear as possible.”

Moreover, Mr Halkitis warned that despite the government’s attempts to clarify VAT, there will remain a segment of society, primarily those politically opposed to this administration, that would never accept any information used or given by the administration.

Asked directly about Mr Christie’s remarks in the House of Assembly yesterday, Mr Halkitis said: “I don’t think it will put an end to anything because of the nature of the complaints coming out.

“Those asking questions aren’t asking from a point of economics or logic. They are of the view that the government is the problem and everything they do or work toward is driven by that.

“Of course, some people will be satisfied and then there are others who will ask other questions, but there is going to remain that group that is going to keep this political and only speak to it from that view.”

Last week former Prime Minister Hubert Ingraham insisted that public concerns over the national debt and VAT would be eased by greater transparency.

Mr Ingraham at that time accused Mr Halkitis of being evasive when it came to “a very basic question about the VAT and the expense for VAT,” adding, “he seemed to have been challenged to respond to the question”.

Mr Ingraham, during an interview on Bahamas at Sunrise, added that the national debt in and of itself would not be viewed as a challenge if persons could see where the money is going and what the money is being used for.

The Christie administration has maintained that VAT revenue, once collected, is directed to the nation’s Consolidated Fund, from which it addresses financial needs and expenses.

On its new website, understandingvat.org, the government answered the question of why it was still borrowing money if VAT was supposed to be used to reduce the country’s debt.

“Governments have to make hard choices,” it says in the website’s FAQs section. “An important goal is to reduce our country’s debt, but at the same time, we have to continue to invest in people and make the changes we need to improve our security and our economy. If we cared only about reducing the debt, we would not be funding new scholarships, building new sports stadiums, fixing roads and docks, or introducing National Health Insurance, for example. But all these things are important to a nation’s health and wellbeing.”