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Govt Beat Vat Target By 46% In First Months

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Christie administration beat VAT collection estimates by 46 percent during the tax's first six months, raising further questions over how it could add $2.2bn to the national debt.

The Auditor General's report on the Government's 2014-2015 financial statements, tabled in the House of Assembly yesterday, disclosed that it beat VAT revenue projections by $68.68m after the tax was implemented during the second half of that fiscal year.

"In January 2015, the implementation of VAT transformed the Department of Inland Revenue (DIR) and, most importantly, the Commonwealth of The Bahamas as an agent of change in tax modernisation," the Auditor General said, extolling the virtues of tax reform.

"The VAT introduction was heralded nationally and internationally as a success. It is important to note that $218.68 million in revenue collected exceeded the Budget expectation of $150m. To reemphasise the success of VAT from January 2015 to June 2015, $218.68m was collected, which is $68.68m above the $150m forecast revenue and has a favourable revenue variance of 46 percent."

The Auditor General's report provides further evidence that VAT has to-date exceeded the Government's expectations as a revenue-raising mechanism, although many businesses and consumers may not necessarily hail it as a success given the impact on their finances and spending power.

Yet it also raises further questions as to the Christie administration's inability to use its VAT revenue windfall to narrow annual fiscal deficits that remained stubbornly above $300m, before - according to its successor - ballooning to over $670m in 2016-2017 due to a combination of pre-election spending and Hurricane Matthew.

Using the then-7.5 percent VAT rate, the Auditor General's report said the $218.68m tax take over that six-month period corresponded to some $3.134bn in economic activity.

"The amount is representative of dollars spent for the consumption of VAT-inclusive standard rate (7.5 percent) taxable supplies of goods and services that cost $2.916bm plus the VAT ($218.68m)," the report added.

"Whereas the Government incurred $1.778m recurrent VAT expenditure (input VAT) for consuming $25.491m of standard rate (7.5 percent) taxable supplies of goods and services domestically. Thus, with respect to government consumption, recurrent VAT expenditure of $1.778m in relation to the recurrent VAT revenue of $218.68m is 1 percent."

The Auditor General added that some $1.344m in VAT revenue remained outstanding as at June 30, 2015, consisting of taxpayers who had made full or partial payment with their filings; VAT assessed for non-filers; audit assessments; penalties and interest applied to arrears.

Elsewhere, the Auditor General acknowledged that real property tax remained the "most challenging of all tax types" for the Government to collect, despite its frequent offers of amnesties and surcharge waivers as an incentive for defaulters to come into compliance.

Noting that $527.409m in unpaid real property tax remained outstanding at the start of the 2014-2015 fiscal year, some of it dating back to 1993, the report said this increased by a further $110.718m over that period to close at $638.128m.

This was despite real property tax revenues increasing by $3.048m or 3 percent in 2014-2015 compared to the prior year's $103.955m. "The Office of the Auditor General recommended that additional measures be implemented to increase real property tax collection and reduce the exorbitant tax arrears," the report said.

"With respect to reducing the exorbitant tax arrears that date back as far as 1993, the Office of the Auditor General recommends a comprehensive review to determine uncollectible outstanding debt and removal of the obligation or claim to be written off."

It also complained that it had not been provided with information on the activities of there private debt collection agencies, hired by the Government to collect unpaid real property tax, in time for the audit review. As a result, it was unable to assess their performance.

As for Business Licence fees, the Government collected $125.846m in 2014-2015. This amounted to a $1.875m or 2 percent increase over 2013-2014, but was some $154,224 below the $126m forecast for the year.

Comments

DDK 3 weeks, 4 days ago

Wonder what will be said about the FNM's VAT collection and the bringing down of the national debt in 2022?

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ThisIsOurs 3 weeks, 4 days ago

Well they're gone, just wait and ask KP at next year's budget how it was done

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John 3 weeks, 3 days ago

Government collecting more revenue than ever and the national debt increasing at a faster rate than ever. Explain

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Well_mudda_take_sic 3 weeks, 3 days ago

Explanation: Crooked Minnis and his cabinet of bandits! LMAO.

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MaryMack53 3 weeks, 3 days ago

And yet our National debt is only increasing. I predict VAT will more than likely be raised to 18% next year.

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TheMadHatter 3 weeks, 3 days ago

The Auditot General needs to shut up and stop talking fool and tell us where the damn VAT money gone from just last year.

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BahamaPundit 3 weeks, 3 days ago

These foolish statements about VAT collection when it's all just getting stollen. Tell me about VAT only when the national debt is being paid down. Telling about a successful robbery is not uplifting but depressing.

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DDK 3 weeks, 3 days ago

Dey all be wastin and tiefin. SSDD.

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TheMadHatter 3 weeks, 3 days ago

BahamaPundit - you are right as usual. Not one single photocopy of a wire transfer payment to the IDB or IMD published in any newspaper since VAT began. YEARS of VAT and no payments made on our children's debt. But the suckers borrowing like drunken sailors every other month and signing MY NAME on the loans.

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DWW 3 weeks, 3 days ago

I concur. Why is debt still rising?

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Porcupine 3 weeks, 2 days ago

The answers to these questions lie in this same paper. Theft and corruption in EVERY governmental department. An overwhelmed justice system that would collapse completely if even a fraction of the corruption and theft cases came before it. Zero transparency proven by the shredding of documents and outright lies. A Prime Minister who has severe intellectual challenges to the very ideas of democracy and an elevated sense of self. A culture of no accountability, across the full spectrum of society. No need to show up to work to get paid, theft of public resources, theft of public money. No accountability, no punishment, no jail time, plus you get tot keep the stolen items. A system of governance that relies on re-election to maintain access to the goods, thereby perpetuating the crimes that have not only emboldened our people to lawless ways, but further entrenched these values in a two party system that rewards the worst of the criminal element, both inside and outside government. A taxation regime that overwhelmingly favors the richest in this country such that they want to see little to no change in the political landscape because they are making out like literal bandits, while the vast majority of the citizens are willing to sell everything we own for a low paying, insecure and monotonous part-time job. An educational system that knowingly produces more of the same ignorant citizens who have little appetite for further learning. An educational system that produces citizens unable to stand up and challenge the same under-educated MPs whom they voted in, while remaining convinced that a Christie or a Minnis are actually astute, caring and well balanced individuals capable of managing a country. A religious regime that promotes the ideas that exist today. That men are more equal than women. That there is a better place after life. That there is a man up "there" who actually intervenes in our lives and decides whether we will spend eternity in heaven or hell. From top to bottom, this country can never change so long as we remain willingly deluded by those in positions of authority. Even today, when we can see for ourselves our overwhelming failures, we still cling to the lies and promises by those who have and continue to fail us.

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