EDITOR, The Tribune.
COMING on the heels of the OECD and its G-20 and European Union (EU) members threatening ‘blacklistings’ a few short months ago Mr K Peter Turnquest, Bahamas Deputy Prime Minister & Minister of Finance suggests The Bahamas might have to look at implementing a low-rate corporate income tax in order to comply with demands from the Organisation of Economic Cooperation and Development (OECD).
How The Bahamas will comply and whether it will be forced to adopt a corporate income tax is disconcerting.
Bearing in mind businesses already pay a business licence tax on gross income, the threat of even more taxation, following on the heels of the introduction of Value Added Tax that has had such a negative impact on local businesses 2015 is casting a very gloomy outlook for meaningful economic growth.
Another aspect of these proposals appears to be going unchallenged is the fact they are being forced on us by a supranational organisation.
Even Mike Moore, former Director-General of the World Trade Organisation and former New Zealand Prime Minister, called for better transparency with decisions like these.
He put it this way:
“Citizens of individual countries will not, and should not, accept any form of international regulation or institution over which they have little control. Keeping control of bureaucrats at a domestic level is tough enough: at an international level it will be tougher.”
“In the end there is no single structure, institution, theory, flow chart or magic bullet. Domestic civil society was painfully built up over centuries by thousands of concerned individuals and their interaction. Trust in law and society’s institutions was eventually earned. International civil society will be built on integrity, and respect will be earned on the basis of results. But it’s a long, imperfect process.”
The Bahamas taxation system needs rationalisation but surely that does not mean simply adding another layer of extraction?
The OECD continues to move the goal posts as they relate to compliance issues.
As the sitting Minister of Finance said back in May 2017; “No business can continue with a constantly evolving set of standards. There must be some period of consistency. They (the OECD) have to stop themselves. Otherwise the world will see it for what it is: Unfair competition, and the strong preying on the perceived weak.”
The Bahamas is stark proof that increased taxes, bureaucracy and regulations do not solve economic woes but add to them. Adding yet another layer - more business income taxes - will more than likely slow prospects for economic growth even further.
November 5, 2017.