By NATARIO McKENZIE
Tribune Business Reporter
The Official Opposition yesterday slammed the Minnis administration for its "budget of pain and no gain", arguing that the current 7.5 percent Value-Added Tax (VAT) rate would have been "adequate for years to come".
Chester Cooper, the Exuma and Ragged Island MP and Opposition Finance spokesman, responding to the 2018/2019 budget communication, said: "This is a budget of pain and no gain. This is a treacherous, reckless and dangerous move on the part of the government. We do not put faith in their fiscal deficit recovery strategy and little faith in their deficit recovery numbers. It appears to be purely crude accounting. One hurricane we believe can come along and blow a hole in their strategy. It is simply pie in the sky."
Deputy Prime Minister and Minister for Finance K Peter Turnquest announced during the budget presentation that government is proposing an increase in the rate of Value Added Tax from the current 7.5 percent to 12 percent effective July 1, stating that government could no longer "kick the can down the road" with regards to the country's fiscal deficit.
Progressive Liberal Party (PLP) leader Philip Davis questioned what has happened in the past year that has caused the Minnis administration to jump from 7.5 to 12 percent VAT.
Mr Cooper stated: "The PLP does not support any increase in taxes in this budget exercise and we will vote against them." Mr Cooper argued that the government's VAT exemptions would only make VAT collections more complex and potentially affect revenue beyond what the government expects it will miss out on through granting those exemptions.
"It's clear to me they don't understand how VAT works. This is no people budget. This is betrayal of the trust imposed in them by the people," said Mr Cooper.
While acknowledging that the former Christie administration's VAT white paper had proposed a 15 percent rate which was later reduced to 7.5 before it was introduced, Mr Davis argued: "There's a big difference. What you would have heard about a 15 percent initial VAT exacting of tax was as a result of recommendations being made to us by international agencies. We took onboard their recommendations to considered them. Following consideration and widespread consultation with the business community and stakeholders we thought and we came to the accommodation that 7.5 percent would have been adequate for quite a number of years."
Mr Cooper further argued: "What was different then was that the government consulted widely and they listened to the various consultants and it was determined that the 7.5 percent with no exemptions was the best methodology. They listened to the consultants, the business community ad consulted widely. Bahamians are being saddled with whopping 67 percent increase. What you saw today was political gimmickry at its best."
He continued: "VAT is being removed from say 22 breadbasket items and being increased on every other item that's bought by the Bahamian people. I don't think the Bahamian people will take it sitting down. This is an outrageous display of backtracking on an election promise and an attempt to smooth it over by listing a whole host of exemptions that will amount to less than what the cost increases is going to be as a result of increase in VAT."