By NEIL HARTNELL
Tribune Business Editor
Bahamians are "too often left wondering where their tax dollars are going" because there is little to no improvement in the Government's delivery of public services, an entrepreneur charged yesterday.
Robbyn Thompson, who launched her hair and beauty business in 2012 to finance a college education, told a webinar organised by the TCL Group that many Bahamians feel they receive little to no value from the taxes they pay because they are "still towing the same lines their grandparents towed" despite the world's embrace of digitisation.
"The purpose of paying taxes is supposed to be to our benefit, enabling the Government to offer public goods and services," she said. "The issue with many Bahamians' perception of our tax system is that we are left to wonder too often where are tax monies are going.
"We are towing the same lines are grandparents towed. We feel burdened with very little benefit." Ms Thompson, who was the national youth delegate for the 2018 Commonwealth Heads of Government meeting, added that Bahamians did not want to see "accountability and responsibility" written "on paper" when it came to the management of their tax dollars but, instead, translated into action.
Acknowledging the regressive nature of The Bahamas' consumption-based taxation system (VAT and import tariffs), she agreed that it imposes a disproportionate burden on poorer Bahamians who end up paying a greater portion of their incomes in taxes compared to their wealthier counterparts.
"We have to explore other forms of taxation to reduce disparities in our country," she said. "Every time the discussion on income tax comes up it quickly goes away."
Gregory Pepin, Deltec Bank & Trust's deputy chief executive, cautioned against tax reform being used to simply increase the Government's revenue intake. He warned this could create a scenario where politicians "throw money in the gutter and throw it in the toilet" rather than use it wisely to improve The Bahamas' social and economic prospects.
"It's not going to go back to the people," he warned. "When you had so much tourism, record tourism, infrastructure did not improve."
Instead, Mr Pepin argued that The Bahamas needs to focus on building an "incentive economy" where entrepreneurs - Bahamian and foreign - are stimulated to create businesses and jobs via a system of tax deductions involving the likes of VAT, Business Licences, National Insurance Board (NIB) contributions and real property tax.
He suggested this would create more value and economic growth benefit, dollar-for-dollar, as opposed to paying the Government taxes, and encourage "foreign capital to invest in small and medium-sized enterprises and entrepreneurs to create more value for the country".
"It's good to have taxation, but make the Government accountable," Mr Pepin added. Meanwhile, Rupert Pinder, a University of The Bahamas (UoB) economics lecturer, said the increased government deficits and debt produced by COVID-19 and Hurricane Dorian will likely "put greater pressure on the discussions for tax reform".
He added: "We're in urgent need of tax reform. We've heard over and over it's [the current system] highly regressive. A lot of tax revenue comes by way of consumption, so it places a disproportionate burden on persons at the lower end of the spectrum....
"It's really been a hindrance to growth in a way. Let's look at the construction trade. A lot of the inputs that go into that trade are taxed because so much is placed on consumption. There's a need to look at direct taxation; maybe income tax as well as payroll tax."
Mr Pinder said such direct taxation could also benefit the Bahamian financial services industry by helping to market the jurisdiction as a 'low tax', rather than a 'no tax', platform. This, he added, could reduce scrutiny by the G-7 nations and international agencies while also helping The Bahamas to enter the realm of double taxation treaties.