Deputy Prime Minister K Peter Turnquest.
Reader poll
Do you agree with the IMF’s suggestion that the Bahamas introduce a low-rate income tax?
- Yes, I agree.
- No, I do not agree.
625 total votes.
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government has not ruled out implementing an income tax, the Deputy Prime Minister revealing yesterday: “We have to consider all options.”
K P Turnquest, who is also minister of finance, told Tribune Business there had been no internal discussions within the Ministry of Finance or wider government to-date on the possibility of introducing an income tax in the Bahamas.
He added, though, that the Minnis administration had “taken note” of this week’s recommendation by the International Monetary Fund (IMF) that it should consider a low-rate income tax to replace revenue that will be lost as import duty rates fall.
The Fund also suggested it would be a fairer form of taxation, and Mr Turnquest yesterday said that the Government wanted a tax system that was “progressive rather than regressive” to relieve the burden on lower income Bahamians.
“Certainly, we have to consider all options,” he said of the IMF’s income tax recommendation. “However, to-date no such discussion has been had by the Government, and we’ve not had that internal discussion in the Ministry of Finance.
“We take note of the recommendation by the IMF, and as we go forward we will be looking at adaptations that are necessary due to changes in trade patterns and international trade agreements.”
The IMF had suggested a low-rate income tax as a revenue replacement for Customs duties, which have to be reduced because of the Bahamas’ Economic Partnership Agreement (EPA) commitments and, potentially, accession to full World Trade Organisation (WTO) membership.
Customs/import duties are viewed as barriers to trade, and the EPA agreement with the European Union (EU) already obligates the Bahamas to significantly reduce or eliminate numerous tariff rates.
Mr Turnquest affirmed to Tribune Business: “We will consider all available options to ensure that, at the end of the day, we have a tax system that is simple, reflective of our unique situation in terms of openness as an economy; is progressive rather than regressive so that the burden of taxation is not borne by the most vulnerable in our country, and achieves the revenue yield necessary to provide the services Government must provide for society.”
The Bahamas’ taxation system has historically been based on consumer, or ‘cost of living’, levies such as Customs/import duties and now Value-Added Tax (VAT).
These taxes are regressive because lower income Bahamians have to pay a disproportionately higher percentage of their income in taxes when compared to those who can most afford to pay - the rich.
Both Mr Turnquest and the IMF alluded to the Bahamian taxation system’s regressive nature, the latter suggesting a low-rate income tax will be more equitable because rates would be linked to a person’s ability to pay.
“Over the medium term, introducing a low-rate income tax as import duties are further reduced should make the tax system more progressive and help protect infrastructure and social spending,” the Fund argued.
However, many in the private sector yesterday reacted angrily to the income tax suggestion, fearing it will only increase the taxation burden and slow an already-struggling Bahamian economy further (see other article on Page 1B).
It was also among the reform options assessed by the former Christie administration before it eventually plumped for VAT, with income tax ultimately rejected because the system required to administer and enforce it was seen as too expensive and complex.
Apart from the income tax suggestion there was little that was surprising in the IMF’s statement on its Article IV consultation with the Bahamas, the Fund giving an accurate summary of this nation’s economic and fiscal position.
“The IMF, like Moody’s, has accepted the Government’s fiscal plan as being reasonable, and they - like us - have to see the execution and follow through,” Mr Turnquest told Tribune Business. “That’s the story, really.”
Yet while agreeing with the Minnis administration’s fiscal consolidation targets and objectives, the Fund called for it to lay out “detailed policy measures” on how it will achieve these goals.
Mr Turnquest yesterday said he wanted to create ‘a sinking fund’ in the 2018-2019 Budget,”if I had my way”, which would be used to build-up savings for financing hurricane recovery.
He added that the Government was seeking to strike the right balance on Fiscal Responsibility legislation, and realised that it “cannot continue to kick the can down the road” on public sector pension reform.
The IMF, in a timely reminder following Hurricane Irma, urged the Government to build-in Budget savings to provide “an additional buffer against the fall-out from natural disasters due to the Bahamas’ exposure to hurricanes.
Confirming that the Government will not undertake emergency borrowing to finance Irma relief efforts, Mr Turnquest said: “Going forward we have to build into the Budget a catastrophe fund to react to these kinds of events because, at the end of the day, these shocks can have a significant effect on our spending patterns and debt.
“We want to, as much as possible, set aside some revenues and have funding available to help in the event of natural disasters. That will not happen overnight, but we do have in mind a proposal with respect to creating a ‘sinking fund’.”
Asked when this will be created, Mr Turnquest replied: “If I had my way, next Budget year, but I have to be careful making commitments this far in advance.”
With the IMF backing the Government’s planned Fiscal Responsibility legislation, the Deputy Prime Minister said the Government was seeking a balance between future administrations being able to easily amend it and having the financial flexibility to respond to hurricanes and global recessions.
“We are consulting with experts in this area,” Mr Turnquest told Tribune Business. “We certainly want to put forward a robust piece of legislation that reflects our current circumstances, but gives us the flexibility to respond to external shocks - climate change and hurricanes, and recessions.
“We want to make it as prescribed as possible so that the legislation is not easily or arbitrarily set aside.”
The IMF also identified the urgent need for public sector pension reform, which has already left the Government facing a $1.5 billion-plus liability via a ‘pay-as-you-go system’ where civil servants contribute nothing to their retirement income.
“The whole idea of public sector pensions is an open secret in terms of it being a serious issue for the country,” Mr Turnquest told Tribune Business. “We share the view that there has to be some reform in this regard.
“Specific policy decisions have not been advanced as yet. We recognise this is a can we cannot continue to kick down the road.”
Public sector pension payments are forecast to cost taxpayers $95 million in 2017-2018, up from just over $82 million in 2015-2016, and the situation will only get worse.
The KPMG accounting firm previously disclosed that these liabilities, which it currently estimates at around $1.5 billion, are set to increase to $2.5 billion by 2022, and $4.1 billion by 2032, unless essential reforms are enacted.
These liabilities would push the national debt towards $8.7 billion if included in the calculation, a figure almost equivalent to total annual Bahamian economic output or a 100 per cent debt-to-GDP ratio.
Comments
sheeprunner12 6 years, 7 months ago
Our taxation model is a real unfair mess .......... we tax the bottom 60% of the citizens until their eyes bulge with VAT and other service fees and taxes ....... the rich and upper middle class can survive ...... But if all of the population was being taxed fairly by using a staggered income tax rate system ..... 25-15-10% for the three income brackets (over $100,000 - over 40K - over 20K) with 5% VAT and no other fees on gas, customs etc, it will earn far more Treasury income .... and it will be more fair.
INCOME TAX CAN BE COLLECTED THE SAME WAY WE COLLECT NIB ...... WHEN YOU GET PAID YOUR SALARY, YOUR TAXES ARE DEDUCTED AND SENT TO THE TREASURY. BUT THE GOVERNMENT NEEDS TO ESTABLISH A SOVEREIGN WEALTH FUND WHERE IT PUTS ALL VAT, PROCEEDS OF CRIME, SALE OF UTILITY ASSETS, DIVIDENDS FROM BTC ETC. MONIES THAT MUST BE MONITORED FOR SPECIAL PURPOSES.
OMG 6 years, 7 months ago
What about the fishermen, construction workers, all the Hatiens being paid cash. "Under the table" is a common British phrase. So much for a job legally but cheaper for cash. Additionally, merchants never seem to pass on savings, and we are being double and triple taxed already with VAT.
ohdrap4 6 years, 7 months ago
that is not income tax, it is payroll tax.
that is even more unfair because the lawyers and doctors "are not on payroll" and the they will not pay.
Well_mudda_take_sic 6 years, 7 months ago
Income tax is not the answer. It would only serve to break the backs of 90% of all Bahamians and be used by the Minnis-led FNM government to further grow our already grossly bloated public sector. KP needs to get it through his thick head that we need to shrink the size of our current government by one-quarter (25%) over the next one or two years even if it means civil unrest and more crime over the next several years. At the same time we should immediately pass legislation to facilitate the implementation, collection and enforcement of an across the board annual 15% 'reluctant developer tax' on the estimated fair value of all dilapidated and undeveloped privately owned property in the commercially zoned areas of our five largest cities/towns, with no exceptions save for undeveloped Crown Land, i.e. government owned dilapidated properties would be subject to this tax and public auction as well, but by independent auctioneers. Any accumulated unpaid reluctant developer tax should create a lien on the commercial property up to a maximum amount that can be realized through a forced public auction of the property. This should spur development activity and help create jobs. It should also help our tourism sector by forcing the "clean up" of Bay Street to make it more attractive to visitors.
I have said time and time again that the IMF, OECD, IDB, World Bank, Moody's, S&P, etc. etc. all have a connected common agenda to destabilize and bankrupt the Bahamas so that the foreign corporate interests behind these so called international lending, regulatory and rating agencies can feast like vultures on our natural resources at bargain basement prices. The main hideous instrument of their destabilization efforts is the lending teat ("tit) put to the mouths of our incompetent, dumb and corrupt politicians who will suck on it like drunken sailors. This is the tried and time tested successful modus operandi of the developed countries when it comes to the global establishment devouring the resources of lesser developed countries on the cheap! Our new Minnis-led FNM government must avoid sucking on the debt tit as much as possible, notwithstanding being encouraged to do so by these very same international agencies whose advice is aimed at destroying our control of our own economy and destiny.
Sickened 6 years, 7 months ago
No more taxes until we can get systems and people in place so that we are confident our tax dollars are not being stolen! I am a strong believer that if we get rid of the crooks and the wastage we will run a budget surplus every year based on the revenue we receive now, and there won't be a need for additional taxes.
Well_mudda_take_sic 6 years, 7 months ago
On that note, the recent appointment of Marlon Johnson as Financial Secretary should have all taxpayers in an uproar. Marlon has to go....the Financial Secretary must be someone competent who the taxpayers can trust. Minnis erred badly in selecting Marlon and he needs to fix this faux pas pronto.
TalRussell 6 years, 7 months ago
Comrades! Tribune's headline: "Income tax is NOT ruled out"
This morning's Guardian deadline: "DPM: NO plan for income tax"
C2B 6 years, 7 months ago
Those statements are not mutually exclusive.
baldbeardedbahamian 6 years, 7 months ago
Arrogant and ambitious elected politicians always want to carry out schemes which they lack the resources to fund themselves.. They therefore tax the population to garner enough money to fund their visions. Politicians are the most dangerous group of people in the Commonwealth because they have the power to wreck the economy for generations to come. They will lie as a matter of course and must not be trusted. Remember power corrupts. Income tax is a way for the state to ascertain the finances of each and every citizen and resident in the same way that VAT Is a way to find out the financials of every business, and now churches as well. IN this case knowledge is power. The FNM elected state officials care about Bahamians the same way that the corrupt PLP elected state officials did in the previous administration. That is, they don't care about you, they care about power and enriching themselves..
Dawes 6 years, 7 months ago
One thing people forget is whilst the current tax system is an unfair tax system to the poorer people who end up paying a larger portion of their income in tax. It has meant that Bahamians as a whole pay less tax then people in most nations. This is due to the current taxes being consumption taxes, which means our tourists contribute a lot to our tax base (be it the VAT on any food they buy, to the duty on any goods they buy). Once you get rid of one of those then the number of people contributing to to the tax of the country is reduced, meaning those who end up paying may need to pay more.
However at the end of the day it is most probably going to happen in the next 5-10 years, as Government is not going to take the hard decisions to sort this country out, so will rely on more money coming in, to continue to waste on friends and family. And when that doesn't work they will devalue the BSD.
John 6 years, 7 months ago
If any government was to introduce any additional form of tax in this coin the interim there would be a mass uprising of the people who are already overburdened with taxes. Many presently have no form of income because either they are unemployed or they operate businesses that have been unprofitable for a very long time. Many are watching their hard assets being frittered away while they try to survive, to keep the lights on and food on the table. Others are being forced to cough money for outstanding taxes while the government seems to offer no concessions to help keep businesses afloat.
G Basically what is happening is rather than growing the economy and creating new B. bwealth, the country is recycling the same set of money. And each time it passes through the government's hands there is reason for them to grab more of the money. The economy is declining.what happens next. Will they start seizing people's property or throwing them in jail because of their inability to pay taxes in tough times. Can't you see the financial wolf in sheeps clothing? So while the are making Bahamians financially weaker and poorer, foreigners come in with hard cash and buy up the country, not unlike they are doing in inner cities across the US and in other countries around the world.
Reality_Check 6 years, 7 months ago
Ministry of Finance needs to assess and collect all of the property tax that Sir Snake and his many companies should have paid over the last three decades. Literally millions of dollars to be had there alone!
The_Oracle 6 years, 7 months ago
Funny, the IMF and Government touted VAT as the replacement for reduced duty rates..... Short memories as to which lies they've fed us apparently. As to Government finance, a large sieve leaking through holes of all description, and the solutions is to pour more money into it. Right. The solution is to reduce financial leakage, Shrink the civil service by 35%, kill these stupid initiative killing Welfare programs and handouts, teach fiscal responsibility the hard way! Duty rates must be replaced with something but adding new forms of tax is not an answer, it is a bandaid for incompetence and the ultimate failure of self determination. Glad my country keeps me broke.
sheeprunner12 6 years, 7 months ago
ALL OF YOU WHO HAVE A PROBLEM WITH VAT OR INCOME TAX .......... WHAT ARE YOUR SOLUTIONS FOR THE GOVERNMENT TO RAISE FAIR TAXES FROM THE CITIZENS????? OR MAYBE ALL OF YOU ARE RICH AND LOVE THE STATUS QUO????????
sheeprunner12 6 years, 7 months ago
OK, I got it ........ shrink BIG government, but how?????? ........ Collect real property taxes (fine) .......... Collect VAT (fine) ....... Collect gas taxes (fine) ..... Collect vehicle taxes (fine) ....... Collect customs duty (fine) ........ Collect business tax (fine) ............ It is still an unfair system that taxes the POOR harder than the RICH ........ Welfare has increased, but just listen to what is going on in Acklins and Ragged Island ...... those people expect the government to do what is not really practical at this time and are incorrigible. The government can cut 30% off the PORK in the Budget - if they want to do it ........ But do the politicians want to do so?????
C2B 6 years, 7 months ago
Let's cancel things we can't afford; like the Bahamas Standards and Measures office. Costs millions and is totally unnecessary. I have lots of other examples.
ohdrap4 6 years, 7 months ago
the learning resources unit at the ministry of education, there are nor resources there and the employees sit there doing nothing.
carnival. completely unnecessary as well.
Greentea 6 years, 7 months ago
We can start by decreasing the number of members of parliament and redistributing the saving in salaries and pensions towards better local government and a cabinet with people who are experts in the areas demanded. I don't think Cabinet members have to be elected. I want them to be competent. Then we can trim the public service by requesting a 10% decrease in staff across the board. Each ministry and government corporation can decide who and how. Then we have to work on how we spend money, make people more accountable for funds spent, rein in corruption and develop policies that makes it easier to do business in the Bahamas for Bahamians first and then the others. Clean up the current tax system and be transparent in their dealings. If Minnis and Turnquest drop income tax on Bahamians when the purchasing power of the Bahamian dollar is 25% of what it was 25 years ago- they might see Guy Fawkes style dolls of themselves burning in effigy on Clifford Park. We silent until you push us too far.
TalRussell 6 years, 7 months ago
by TalRussell
CatIslandBoy 6 years, 7 months ago
Why does the Tribune continue to run outdated photos to accompany recent stories? Are they just too lazy, or possess insufficient manpower? This photo is so misleading!
TalRussell 6 years, 7 months ago
Comrade CatIlandBoy, could have something do with the rumour that Governor General Dame Marguerite - has not given up on installing "Reheasa" as the leader red shirts party... if The Queen, gives Her Excellency the green-light?
proudloudandfnm 6 years, 7 months ago
The last thing we need to do is give the overstaffed, lazy, money wasting, extremely incompetent Bahamian government more revenue. That is just stupid....
TalRussell 6 years, 7 months ago
Comrades! You must respect the basic intelligence of your own PEOPLE, before you will be willing be transparent with them! Remember Minnis's and KP's 2017 General Election hidden from the voters campaign's pitch - It's soon goin be time to income tax the poor and near poor people." If you read the Guardian's story on KP and his income tax intentions - you will quickly see why this red shirts cabinet, has no intention of being open and transparent with the PEOPLE.
Confusing is to call KP, an understatement of what's really goin on up in his head?
I needs stiff drink me whisky - before I start thinking I owes "Reheasa," my most sincere apology for misjudging her judgment on Minnis.
DDK 6 years, 7 months ago
Judging from Mr. Turnquest's remarks, one gets the impression that he has no knowledge of the way the IMF and Co. work. Ditto the trade agreements that are rammed down the throats of most unsuspecting nations for 'their benefit'. Or perhaps Mt. Turnquest is simply being politic.
This Government needs to back away form the IMF, World Bank, foreign governments lending agencies, etc. One only has to look at the countries in Europe (Greece, Portugal, Italy, Ireland, France) whose economies have collapsed and are collapsing at the hands of the EU and Co. to see what happens to countries which allow themselves to fall under the control of powerful and avaricious entities.
When VAT was rammed down OUR throats, we were told that customs duty was not collected properly and that VAT would ensure the collection of sufficient revenues to allow a properly functioning government. We were also told that since VAT was so multi-tiered, and effects almost all transactions in the country, customs duties would be reduced to compensate or offset increase in the burden of taxation on Bahamians. Now that customs duties are finally being reduced, Income Tax is rearing its ugly head. What has happened to the idea of reining in out of control government spending? Why should struggling Bahamians be punished for the excesses and incompetence of successive governments for the past six decades? Why is it so easy for the 'haves' to implement taxation on the 'have nots'? There is no such thing as a "low" income tax. Once implemented it would be increased on a regular basis. Just look at the NIB rates. Another hit on The People. Whose time is it KP? Trust those who elected you will not stand for more taxation.
What of the tax on the numbers houses? They are the largest current drain on the Bahamian economy. All very hush-hush.
Gotoutintime 6 years, 7 months ago
All the best of luck in the collection of income tax----People these days don't pay their real property taxes and they don't have a problem---Hell, some people don't even pay their power bills and nothing happens to them.
John 6 years, 7 months ago
The reason the country's finances are in dire straits is because there was a dual financial economy for too long. There were those Bahamians who tried to pay a fair share of taxes and there was those who paid none. Then there were those companies (yes mostly foreign) that got huge tax breaks and other concessions and still failed to pay the little that was required of them. Many left the country owing millions to the government, to workers and to other enterprises. The banks have too many Bahamians by their necks where they are highly leveraged with little or no cash income. And so they are losing asstfor which they have paid the bank for many years. Advice to any property owner. If you have cash and still owe the bank, try paying off your loan. Especially if they are paying you zero interest on your deposit. It means the bank is getting its interest on your loan plus the interest they should be paying you on your deposit. St one point Donald Trump was saying he was not worried about the US national debt. He said when it got out of hand he would declare the US bankrupt and ask its biggest creditors to forgive the debt. That works for companies but can it work for a country?
OldFort2012 6 years, 7 months ago
I would love for someone to explain to me how VAT is a regressive tax and unfair on the lower paid. If someone earns B$20,000 and spends it, he pays 7.5% = B$1,500. If someone earns B$100,000 and spends it, he pays the same 7.5% and that is B$7,500. Therefore, it is not regressive, it is flat. It only becomes regressive if people do not spend what they earn. And the proportion of those in the Bahamas is so low, you can count them on the fingers of both hands. That is why they invented staggered levels of VAT. For example, food could be at 5% and cars at 25%, medical services at 0% and boats at 50%...and so on. You charge more VAT on luxury items and claw back the difference, making it flat at worst and progressive at best. If you introduce income tax and lower VAT and/or import duties, everyone here out West will open another bottle of champagne. Because no one has any income (mostly retired) and therefore will contribute less overall. In fact, I will wager that total revenue at the Treasury will FALL with the introduction of income tax and the lowering of VAT and/or import duties. But there again, no one ever accused the IMF of knowing local conditions and what will fly and what will not. Pillocks.
Well_mudda_take_sic 6 years, 7 months ago
VAT is a regressive tax and why so can be found on umpteen highly reputable web sites. Your logic above is fundamentally flawed. All other things being equal, higher income people are left with much more disposable income after paying VAT than lower income people. It's really as simple as that.
OldFort2012 6 years, 7 months ago
Well, no, it is not as simple as that, because real life is not as simple as economic theory. As I wrote above, you are right, only because of the higher propensity to consume of the poor. It is only regressive if that is the case, which in the Bahamas applies to very few people. That is why you can stagger the rates and make it progressive. Who pays tax in the Bahamas? Lyford Cay, OFB and Albany. Why? Because they pay enormous property taxes and VAT on what they consume, which tends to be in the ratio of at least 10:1 per household (10 times as much as Bahamian households). Everyone else pays almost dick shit. If you now reverted to an income tax as opposed to consumption taxes, you would be giving these guys a massive tax cut. Because they have no "income". They make ZERO in the Bahamas. They don't even have the right to work, so they cannot have any income, even if they wanted to. Therefore: switch to income taxes and the total take to the Treasury WILL FALL. No doubt about it.
ohdrap4 6 years, 7 months ago
they are nottalking about 'reverting ' nothing.
they are talking income tax IN ADDITION to vat and customs duty.
which country in the world has income tax in lieu of VAT? none.
professionalbahamian 6 years, 7 months ago
Agreed that the system of Duties is a failed system. BUT It does NOT make sense to give any government more money until those who have stolen from the consolidated f'ing fund are held accountable!
Do we see any concrete results yet? When will we get full transparency and the thieves locked up? When?
Perception is that things are/ will be better BUT is it just business as usual at the top?!!
STOP wasting / stealing our tax money before adding more taxes period!
John 6 years, 7 months ago
ALL OF YOU WHO HAVE A PROBLEM WITH VAT OR INCOME TAX .......... WHAT ARE YOUR SOLUTIONS FOR THE GOVERNMENT TO RAISE FAIR TAXES FROM THE CITIZENS????? OR MAYBE ALL OF YOU ARE RICH AND LOVE THE STATUS QUO????????
We pay vat, property taxes, national insurance tax, business license tax, business pay garbage collection fees, and every other good or service the government offers comes with a price. All the utilities are overpriced and of low quality. Crime, especially murder is rampant and getting worse. When your government want additional taxes then raise the bar for its performance. And you stand in a line for over an hour at RBC just to pick up a renewed credit card.
SP 6 years, 7 months ago
Can someone at the Tribune please update the photo of DPM Turnquest with one NOT showing BLT. Thank GOD she is no longer a sitting member of Parliament!
Just seeing BLT in the file photo gives me the heebeegeebees and nightmares that she might come back from the ash's talking again about how her one and only good parents made sure she was magnificently educated and highly intelligent.
ashley14 6 years, 7 months ago
Misappropriation of funds seems to be the problem. With all of the fees and VAT that they collect, that I know about. Meaning I don't claim to know it all. I don't see anything that they are doing. I'm always reading about what they need to do, but I don't see anything they have done. They don't even pay the people they owe salaries to on time. I was reading last month that instead of paying the school bus drivers, they paid the wrong people. How do you do that? None of my business. I sometimes can't believe what I reading.
ashley14 6 years, 7 months ago
But Income Tax might be more efficient than VAT and fees. It does take money to well manage a country. I don't mine paying income tax, but we drive on nice roads. Our municipalities are well maintained. We have programs to help whatever the need. I don't know it seems to work.
TalRussell 6 years, 7 months ago
Comrades! Let me give you a better understanding of VAT and who ends up with it in their pockets and bank accounts? In fact, some does leave VAT monies in their 'Last Will and Testament'.
Being VAT is a classic example of a tax being paid by the majority of Bahamaland's poor and near poor - to prop up the more well-to-do-citizens and residents lifestyles. Therefore, shouldn't its payment be made a 'constitutional voluntary payment' only due and payable on the last day of December of the year.... Meaning, how much you pay will be dependent upon how much the poor and near poor peoples money - will they be voluntarily willing to hand over to the government for the politicians to pass on to prop up the lifestyles their red shirts nobility class?
Amen!
TheMadHatter 6 years, 7 months ago
Govt accounting needs to change from cash to an accrual system so we can see what debts are out there.
Treasury needs to publish ins and outs MONTHLY online for everyone to see.
Why do we always only find out AFTER FIVE YEARS some of the foolishness that the last govt did. Why cant we see the books on THIS govt? They know they have five years to hide anything they want. Just like the previous one.
How much money came into Tressury in July? How much went out. From where and to where? Even the Shadow Minister of Finance has no authority to obtain this info. He can only ask. He can only beg. He has no right to it. He can only shut up and wait for next election.
ashley14 6 years, 7 months ago
Accountability is important. If you could see the progress being made you wouldn't question how the money was being spent. Like it is it leaves a lot of questions.
RECO 6 years, 7 months ago
PART 1 of 2
FIRST let me say that I LOVE THE BAHAMAS, it's beautiful waters, rugged but awesome Cays and the colorful and special people that live there. I have been visiting for over 30 years now and the Out Islands are the GREATEST place in the world.
HOWEVER, your nation is in a sad state of financial condition. YES there is corruption in every government and money gets wasted or redistributed to those in power for their own personal gain (in my home country of the USA, there is as much corruption as in any country (generally at the higher levels) and I also live in Mexico which is CORRUPT at every level) and surely the Bahamas has their share of this and that doesn't help the situation.
You are finding yourselves in a situation that you cannot tax your way out of. There just isn't enough money out there in your current economy to make it work. The bleeding MUST be stopped at the highest government levels and continue down through the ranks to the local levels. What you need is more DFI (Direct Foreign Investment) because you cannot generate enough from within, so that's you ONLY OPTION. How do you do this? You make your investment environment attractive enough to entice those with the capital to risk it in your country. In the US and Mexico we are experiencing a HUGE POSITIVE MARKET IMPACT in the retirement of the Baby Boomers, those turning 65 and retiring or trying to. Of course many have not saved enough to live the way they would like to, nor can they afford the Bahamas, but many have and that's who you need to target. You must make the Bahamas affordable to more than just the 1%'ers or those that have more than $1MM USD in annual income. There just are not enough of those to go around and you are already getting most of those that you are going to be getting anyway. IF your government's LESS THAN USER FRIENDLY bureaucracy that has been created would be revised to make the experience more user friendly and profitable, then you could build the base on which to increase your economy.
I am sure that the Bahamas is suffering form the BRAIN DRAIN, as has Cuba and many other countries. Whereby your best and brightest that are native Bahamians get educated there or abroad and then settle outside of the Bahamas and make their lives elsewhere, which does not benefit or asset the Bahamas as a nation. STOP THE BRAIN DRAIN and give them a reason to want to return or remain and make their lives in your country - IN THEIR COUNTRY.
SEE PART 2 NEXT
RECO 6 years, 7 months ago
PART 2 of 2
The development focus should be on the Out Islands, as the population needs to be shifted out of Nassau. That place has gotten so out of hand with crime that who of us from the outside would logically decide that's where we would want to go and enjoy our time and your country? There are shootings and killings there every week. When was the last time multiple people in 1 week were killed in Abaco? Exuma? Eleuthera? That's where projects need to be developed to attract the new base for your economy and reduce the pressure on an already overpopulated New Providence.
I know that some of you are shaking your head and saying to yourself or the ppl in the room with you that this Cracker is CRAZY (LOCO GRINGO here in Mexico) and we are NOT GOING to sell our birthright and all of our land here in the Bahamas to foreigners. Well that's certainly your RIGHT to take that position, but I can afford to watch from afar as you go down with your beloved ship, aka the Bahamas, as it ultimately defaults on it's debt and your real situation gets SO MUCH WORSE. Can you afford to allow that to happen? All in the name of not wanting foreigners to own some of your land? You have so much UNDEVELOPED land in your country that it seems hardly a difficult concession to make in light of the salvation that it will bring in the preservation of your nation, as the handwriting is CLEARLY on the wall.
For those of you who have read this far, THANK YOU, and I'd like to address the INCOME TAX concept. It is a HORRIBLE idea. Use the USA for your example. The staffing & overhead required to collect and enforce your new tax code would be overwhelmingly counterproductive. And the tax code in the USA is so huge and complex that not even all of the accountants understand, much less the citizens. And yours would eventually end up there too and the Accountants & Lawyers would successfully lobby to keep it in tact and make it even more difficult so that their jobs and income would be secured into perpetuity.
K-I-S-S - Keep It SIMPLE Sweetheart. Your concept of VAT was brilliant if one needs taxation. It is SIMPLE, straightforward, easy to collect at the point of sale and based upon consumption. If you don't go buy a new TV with the money you earned, then you don't pay VAT on that TV and get to SAVE some of the money that you have earned. The Bahamas will ultimately end up with a 15%-16% VAT to make ends meet and that will be perhaps the maximum that you can withstand before REVOLT sets in. But stay away from INCOME TAX and plz consider my suggestions on how to rebuild your economy. I am available to consult on this effort if ever needed for serious consideration or implementation.
sheeprunner12 6 years, 7 months ago
Good review .......... but we have a tax evasion and collection problem ....... any suggestions there????????????
TheMadHatter 6 years, 7 months ago
RECO is 100% correct...except i would add one caveat and that is not to sell land to Communist China. By the way when did Communist China's name get shortened to "China" ?
TheMadHatter 6 years, 7 months ago
Sheeprunner....the answer is transparency. New Govt? No FOI Act actually in place yet? Of course not. No finance info online? Of course not. News people giving info being hauled...of course yes.
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