The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian businesses yesterday urged the government to cut waste and excessive spending before coming to them with demand for new and/or increased taxes.

Dwayne Higgs, WHIM Automotive’s general manager, told Tribune Business that The Bahamas “definitely cannot handle any tax increases” given the economy’s continued struggles to free itself from COVID-19’s grip.

Speaking after Kwasi Thompson, minister of state for finance, told the Senate that the government is readying to conduct another tax reform study, he added: “My position has always been to prove to me that you can spend the taxes you’re collecting now responsibly, which I haven’t seen.

“There’s a lot of waste going on. We just can’t handle any increase. The time is not good. We need more foreign dollars coming in to get us back where we were before, so we don’t need any increase in taxes.”

Mr Thompson, in his mid-year budget debate contribution, said a study by the Organisation for Economic Co-operation and Development (OECD) in 2020 found that The Bahamas was the “lowest” taxed jurisdiction in the English-speaking Caribbean when measured by government revenues as a percentage of gross domestic product (GDP).

“With such a relatively low taxation system, there is no doubt, we must effectively manage every dollar we collect and we must collect every dollar that is owed. It also means we must achieve greater revenue sufficiency to protect the country from severe economic shocks and ensure fiscal resilience,” he added.

We will not make rash, politically expedient decisions when it comes to taxes and government revenue,” Mr Thompson pledged. A new assessment of our current tax policies and administration is required. Since late last year, the government has been in discussions with our multilateral partners to conduct an updated review and assessment of our tax regime.”

The “multilateral partners” were not identified, but the minister was likely referring to the likes of the Inter-American Development Bank (IDB), International Monetary Fund (IMF) and the latter’s regional affiliate, CARTAC.

Affirming that the government has been paving the way for another taxation study in the wake of both COVID-19 and Hurricane Dorian, Mr Thompson added: “While we have conducted studies in the past, they are time sensitive and must be grounded in present and anticipated future realities. The past two years of economic trauma require a reimagining of the future.

“A new assessment is critical now more than ever before. Such a study will not only aid in reviewing flaws and weaknesses in the administration of our tax system, but it will also review our tax rates, policies and types of tax. At the conclusion of this exercise the public will be engaged on the way forward.”

Mr Higgs, unconvinced about the need for new or higher taxes, said: “We need a more frugal government because we’ve all had to tighten and pull back on things we would have liked to do, and some people are barely getting by and not able to eat.”

“The government needs to have a little dose of reality, and maybe they should have done what everyone else did and take a pay cut so that they could understand. I think they are a little out of touch.”

Brent Burrows, general manager of CBS Bahamas (Commonwealth Building Supplies), said: “I feel that if the tax study includes how much money the government is letting fly as far as non-payment of real property tax and business license fees, then I welcome it.

“But if the tax study is to try and milk us honest businesspeople, and honest citizens, out of more money then I have a serious problem with that.”

Mr Burrows said it was “no excuse” that The Bahamas has the lowest tax revenues as a percentage of GDP in the Caribbean, and added: “It is just ridiculous. Look at this thing they did with property taxes [the recent amnesty]. So here the honest citizen again is being punished for paying their taxes on time.

“I know that the government is desperate for funds, and what they feel now is that they’re going to look at some easy ways of getting funds. That, unfortunately, means higher taxes for the people who are paying taxes as it is now.”

Vasco Bastian, owner and operator of Esso’s East Street South and Soldier Road location, said tax reform will be a “benefit” to the country.

He pointed to the bulk of the economy being carried by the middle class, adding that changes which reduce their tax burden should be welcomed by all.

Mr Bastian said: “Any type of tax reform that would reduce the burden on the Bahamian people and get us to the next level as a country, we need to investigate it and look at it. We’ve been spending more than we take in for years now, and some hard decisions have to be made as a country in order for us to survive.”