EDITOR, The Tribune
According to The Tribune of May 19, 2020, a group calling itself the Organisation for Responsible Government (ORG) apparently sees it as quite responsible that a country that runs itself on revenues representing a mere 18 percent of Gross Domestic Product (among the lowest on the planet) and that derives the bulk (more than 70 percent) of these revenues from taxes that disproportionately impact the poor while exempting wealthier residents from worldwide norms of taxation on income, capital gains and property, should respond to the resulting fiscal imbalance by further downsizing the public sector.
Yet again, the message seems clear: we need tough, bitter, radical change – so long as it doesn’t touch us!
Rather than simply reporting such views (and thereby giving them a respectability that they do not deserve), the Bahamian media should at least concern itself with presenting them in the wider context outlined above and possibly even ask questions about who funds them and whether the special interests that would benefit from their implementation are representative in any way of the broader public good.
ANDREW ALLEN
Nassau
May 21, 2020
Comments
hrysippus 3 years, 10 months ago
you are wrong with many, if not all, of the points that you have cited. Show any evidence for any please.
Porcupine 3 years, 10 months ago
Sorry, but the onus is on you hysippus, not Mr. Allen. He has presented the reality in the stats above. Check them out for yourself, before critiquing what is obvious to anyone with the knowledge base needed to understand this issue. Mr. Allen has presented the evidence above. Short, sweet, and to the point. There is room for debate, but not prior to understanding what he has said, which it appears you do not.
tetelestai 3 years, 10 months ago
Actually, hyroicus, he is quite right...and he is among the few that actually understands economic principles.
Porcupine 3 years, 10 months ago
Quite right, Mr. Allen. The problem is that we have gotten a bit too used to the present unfair and unequal distribution of wealth and income because there has been more than enough to engorge those at the top, while allowing just enough to trickle down to keep the masses silent. This is true from a political, as well as, an economic perspective here. But, it seems, those days are over.
Not to mention that most of our leaders, business and political, have been educated and brainwashed by this neoliberal economics that has infected our planet. Causing far worse damage than any viral pandemic.
But Mr. Allen, you waded into dangerous territory by mentioning "public good". We all know that in a very vocal Christian community such as The Bahamas, anything that resembles fairness, decency or economic equality, that would qualify itself as truly Christian doctrine, is completely off limits. I suppose that the collection plate on Saturdays and Sundays is heavily weighted towards those who wish to buy the amount of indulgences needed to get into heaven and to keep those pretty church doors open and their pastors living well. It is amazing that the pastors are so ill-educated that they cannot identify Christian principles if they were slapped on the face with them.
We have continued to be misled, not just The Bahamas, but the world, into thinking that the current ideology guiding our economies makes any sense to the vast majority of people on this planet. The numbers bear out this failure, but many people continue to make excuses for these failures, criticizing only the people, rather than the system and ideology behind them. It will be a long row to hoe, Mr. Allen, but I hope that you continue to point out what we should all truly be fighting for. The "public good" is something that is inherently human, decent, right and Christian. It is a shame that so many otherwise decent people are unable to grasp, and argue for, this basic and important concept.
hrysippus 3 years, 10 months ago
Mr. Allen just does not get it with regards to the wealthy ex-pat residents. He is not alone of course. These wealthy residents choose to live here, not because of our high murder rate, not because of the threat to property from storms, not because of the academic achievement of the populace, but because they do not have to pay a high amount of taxes. That's it. Increase taxes too much and they will relocate to another country that offers a more welcoming tax regime. You never miss the water until the well run dry. These wealthy residents contribute much to our economy but Mr. Allen seems to want to risk driving them away. Let us hope his political ambitions fail.
Porcupine 3 years, 10 months ago
Sort of like inviting people to go to Disney World for free. If you think The Bahamas only attracts people because of its no-tax regime, you underestimate the beauty and tranquility of what we have here. There are not many places in the world, growing even more scarce daily, whereby people can experience the natural wonders, safety, and peace that come from being here. If we realize that, we may have a future. Continuing on with the same mindset and expectations is a recipe for..........................
Proguing 3 years, 10 months ago
There is a place as beautiful as the Bahamas called the Cayman Islands with a much lower crime rate, better education etc. where wealthy expats and entrepreneurs have been relocating to, from the Bahamas for quite some time. They also have lower taxes than the Bahamas. So not only does this demonstrate the theory about higher taxes being good for the economy of Mr. Allen to be incorrect, but if we increase our taxes the exodus to the Cayman will only get worse.
ThisIsOurs 3 years, 10 months ago
Looks like strategy time. Whats the endgame? Do we want a Bahamas where the rich foreign expat has the run of the country and we tax locals into oblivion to keep the foreigners happy? Eventually that model will run it's course. We'll constantly be ceeding ground just to get them not to leave us. As more and more Bahamians fall into poverty and the gap between the rich and poor increase, we're going to see problems that will have the rich fleeing anyway.
Rather than catering to the rich foreigner, who may leave for Cayman anyway maybe because it's less black(?) less people(?) less crime(?) Who knows? We need to focus on strategies to get Bahamians out of poverty. For me that's always a focus on skills and retraining
tetelestai 3 years, 10 months ago
No they will not. Geez, can you at least try to understand economics. There have literally been hundreds of academic studies that show that offshore tax rates are relatively inelastic - i.e., foreigners will not "run off" just because the local government introduces a nominal tax rate. This statement is just false and shows an ignorance of both economics and common sense.
Allen is correct, tax is disproportionate, the wealthy should be taxed more, the ORC's suggestions are nonsensical and discriminatory and - most importantly- are not grounded in any economic fact. For references: google Richard Heilbronner/ Peter Conti Brown
momoyama 3 years, 10 months ago
Hi Hrysippus, Andrew Allen here. Since you seem to know so much about the benefits of wealthy foreigners living here, can you list them??? The benefits are marginal and they are, in the present setup, significantly outweighed by the costs. The out-pricing of Bahamians out of property is merely one. In other places that cater to the high net worth buyers of luxury properties, this is balanced by a hefty real property tax regime that actively takes and resells delinquent high-end properties. Here there is no such balance. I come from an upper middle class, relatively prosperous Bahamian background and could not hope to have moved out of my parental home into anything other than a steeply diminished living standard if I had left home in the first 5 years of work. The situation is worse for most. In places like Harbour Island, locals now own next to nothing except for the little ghetto area which is only unsold to foreigners because of faulty land titles.
Again, please list these advantages of having wealthy foreign residents live here. Please.
Are they big consumers? No they are not. The lower middle class supports every kind of retailing business. Just look at Carmichael road and the number of businesses it has spawned in the last 40 years (if you can remember that long). Now find a comparative level of business supported by the the consumption of residents of Lyford Cay or Old Fort Bay, where my parents live. No comparison.
Perhaps unlike you, I have been mixing with these supposedly savior foreign wealthy residents all my life. My family were members of Lyford Cay since 1973 and I count many of such people as family friends. But it is PURE MYTHOLOGY that they somehow contribute largely to our economy. THEY DO NOT (unless of course, you are a Filipino maid, which would explain your skewed understanding of the economics of this matter).
For the record, in tying my arguments about the wealthy not paying enough taxes to the question of wealthy foreign residents, you are demonstrating an embarrassing lack of understanding of the difference between the DOMESTIC and the OFFSHORE economy. Only incomes earned in The Bahamas and capital gains made here would be affected by such taxes. That has NOTHING to do with the offshore sector. But it means that Colina Insurance or Commonwealth Brewery (which now pay ZERO corporate income tax, unlike their equivalents elsewhere) would contribute, as would someone like me making a few hundred thousand dollars a year. Does that sound unfair to you? Honestly?
The problem in our country is the frankly ignorant level of public debate, which allows uninformed views such as the ones you expressed above to go unchallenged and find themselves written into policy by politicians who simply have no clue about the specific economics of The Bahamas.
Proguing 3 years, 10 months ago
About your comments on Harbour island. Without foreigners the small island would be like Ragged Island. I invite you on your next visit to ask the Brilanders if they would prefer to live on Ragged Island, although I doubt their answer will please you.
momoyama 3 years, 10 months ago
As per your comment about my understanding of these things, I hold a masters degree from the University of London in Corporate and Trust law and have been practicing law in the areas of high end real estate and offshore work since 1997. If you think that foreign residents live here because of income tax then you simply have no idea what you are talking about. Do you know what income tax is? It is tax on income earned in The Bahamas. By definition, foreign residents whose wealth comes from abroad (which it has to if they come here wealthy) CANNOT pay tax on that wealth earned outside the Bahamas.
You are making the same mistake of many Bahamians (including, sadly , politicians) who confuse onshore and offshore wealth. ONLY WEALTH PRODUCED IN THE BAHAMAS would be taxed by a Bahamian income tax. So what on EARTH are you talking about?????
Do you think a wealthy American who moves to France will pay tax on his US income while in France??
People who come here for tax purposes come to conduct offshore banking, establish trusts etc. They are usually NOT resident and are not to be confused with people who come here because they want a home in a beautiful part of the world. Tax is NOT a major consideration. In fact, as a HIGH COST place to live, no costs are a major deterrent to foreign residents. Otherwise they would not be in a country in which every single cost factor (power, transport, food and especially land) are comparatively very high priced.
Please try to get these things straight before you offer strong opinions on them.
Bobsyeruncle 3 years, 10 months ago
Do you think a wealthy American who moves to France will pay tax on his US income while in France??
Mr Allen, although I agree with some of the things you've stated, this particular statement is not entirely correct, to my knowledge. US citizens are taxed on their worldwide income, irrespective of which country they are domiciled in. Now, there are some tax breaks if they are out of the country more than a specific number of consecutive days during any tax year, but they are not total concessions, and they will still have to pay a good chunk of income and capital gains tax even if if they meet all the requirements for being domiciled outside of the US. The only way for a US citizen to not pay any taxes on their worldwide income, is for them to give up their US citizenship.
The UK tax laws are different in that UK citizens only have to pay tax on their income from within the UK. They are not taxed on any income they receive from outside of the UK, as long as: a) they meet the minimum requirement for the number of days being domiciled outside of the UK during any tax year; and b) they are not living in a country that the UK has a dual tax agreement policy with, such as the USA.
momoyama 3 years, 10 months ago
Perhaps I did not express myself properly in my haste and frustration in responding to some of the earlier comments.
What I mean't to say that US persons who own a residence in France are not thereby subject to French income tax on their income that continues to be made in the United States. I am very aware of the US government's own policies on taxes on worldwide income. I am also very aware of the UK's very different stance.
However, the point I was making is that, in neither case would my call for taxes on high incomes generated in the Bahamas result in a US or UK national who merely resides here being taxed on his overseas income. The same would hold with French taxing officials, who would not tax income made in the US (or UK) by persons merely resident in France.
As for your reference to US worldwide income taxation, it underlines my point that there is zero tax advantage to becoming a resident in The Bahamas for a US resident, hence it is not a factor in their deciding to do so. As for UK individuals, we (the Bahamas) become no more or less attractive to them as residents on account of whether or not we have local income tax, since such local income tax will not affect them.
Bear in mind that foreign residents of The Bahamas are, except in exceptional circumstances, prevented from engaging in the local economy as income earners. So our having a local income tax does not affect them.
Bobsyeruncle 3 years, 10 months ago
Thanks for the clarification. As a UK citizen myself who is also a US permanent resident, and who previously lived and worked in The Bahamas, and still owns property there, I can endorse what you are saying.
I personally think the Bahamas government should introduce a tiered real property tax (even though I myself would have to pay it). The US states that don't have State taxes, such as Florida, Indiana etc, typically off-set that benefit by having much higher property tax rates than States that do have State Tax.
Like many expats who live in The Bahamas, or own property there, I don't have any significant income apart from rental property income on which I pay Bahamas VAT and US taxes (as necessary). Taxing expats like myself will contribute very little to the Treasury coffers. I do however contribute to the economy by buying household goods etc on the Island, and paying customs duty on imported goods, whenever I visit.
Like you said, there is zero tax benefit to me in becoming a semi-permanent or permanent resident of the Bahamas, unless I give up my US permanent residency ( & keeping my UK citizenship). If I did that, then it is my understanding that it would open up a whole minefield of complications with my US based personal financial investments.
Bobsyeruncle 3 years, 10 months ago
I also think VAT, rather than Income Tax is a better way for the government to make sure expats contribute to the economy. As you stated, income tax will only hurt Bahamians and not expats because most expats can't work in The Bahamas and derive very little income from there. Increasing VAT (again) would not be popular with the majority of Bahamians, but it would at least make the expats contribute more to the economy when they purchase goods or services. Surely this is a better option, than having just Bahamians pay income taxes. - Flame Suit on for some of the others on this Board
mrsmith 3 years, 10 months ago
Allen, please clarify:
“Bear in mind that foreign residents of The Bahamas are, except in exceptional circumstances, prevented from engaging in the local economy as income earners. So our having a local income tax does not affect them.“
There are foreigners resident - living and working - in The Bahamas on work permits, others with businesses in The Bahamas, and others still who have Bahamians fronting businesses for them.
Besides the fact that the income earned by these businesses in The Bahamas should be taxed by The Bahamas, via corporate tax, these persons are clearly not ‘prevented from engaging in the local economy as income earners.’
Proguing 3 years, 10 months ago
Dear Mr. Allen,
So you hold some kind of British degree which makes you an authority in economics and everyone who does not agree with you is uninformed.
Apparently you missed the course about economics not being an exact science. As Winston Churchill once said if you put two economists in a room, you get two opinions. That does not mean that one is uninformed!
momoyama 3 years, 10 months ago
Political ambitions? You must be kidding.
Porcupine 3 years, 10 months ago
Excellent comments Mr. Allen. Thanks for taking the time to educate.
Sign in to comment
Or login with:
OpenID