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Fidelity bank chief Bowe says it would be unwise to reduce taxes on gas

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Gowon Bowe

By RASHAD ROLLE

Tribune Senior Reporter

rrolle@tribunemedia.net

A TOP financial expert says reducing taxes on gas in response to soaring prices would be unwise and short-sighted.

Gowon Bowe, chief executive officer of Fidelity Bank, said people should better ration their gas expenses and consider such cheaper solutions as public transportation and carpooling in the wake of rising fuel prices.

The Bahamas Petroleum Dealers Association (BPDA) has threatened to strike because members are losing money from the spike in oil prices.

Vasco Bastian, BPDA vice president, has said value added tax and stamp taxes should be alleviated to help operators.

Mr Bowe, however, said it is a slippery slope to have the government reduce taxes in response to cost increases. He said: “As food items go up, as the cost of fruits go up, as the cost of grain and bread goes up, are we going to say that for every item that goes up in cost that the government needs to have a knee-jerk reaction which is (to) remove the tax?

“The government can only provide its services by the revenues it collects, so whenever the government makes a decision to actually remove taxes on any item that it currently taxes by virtue of our tax system, it needs to understand how it replaces that tax.

“I think persons are looking at the fuel price at the pump and not appreciating that actually the taxes on fuel are not based on the dollar at the pump, meaning what the distributors pay. “It is based on the actual gallons so there is a fixed dollar cost that the government actually imposes. When the price from where we buy it goes up, yes, the fuel price goes up but it’s not the taxes that are driving up the fuel price, it is the underlying price of fuel.”

Some jurisdictions have responded to the global gas price increases by adjusting taxes. In Connecticut, USA, a law was passed that suspends excise tax on gas from April 1 to June 30th. Similar action was taken in Georgia.

Mr Bowe said the amount of VAT people pay on gas has not increased much even as gas prices soar.

“The issue on the value added tax is if you pause and think about it this way,” he said, “when fuel was $4.50 value added tax would’ve been 45 cents. Now that fuel is $6 value added tax is 60 cents. The actual incremental cost on the fuel is not as large as people think because the move from $4.50 to $6 is not driven because of value added tax, it is actually driven because before an oil tanker used to bring it in at one price, now that price is escalating.

“When we start having the conversation about what the government should do in order to ease the burden of citizens, first thing let’s compartmentalise this. Do we believe that all citizens need the support? If the answer to that is no, is removing VAT going to be a targeted assistance for the persons who can least afford it? And if the answer to that is no, is the VAT removal the most appropriate mechanism? And I would say to you the answer is absolutely not.

“If I have a vehicle and I’m putting fuel in the vehicle and I decide that I just ride up and down because I could afford to do so I need to change my lifestyle. The individuals who are poor may need to look at carpooling. They may need to look at using the public transport system. They may need to look at what is the best use of my energy sources in terms of not just dashing to the food store every ten, fifteen times a week because that is easy enough to do so. If government changes its tax structure it is either going to have to remove services that it is providing using those tax resources or it is going to have to borrow, and if this fuel escalation is somewhat temporary, do we change a system for a temporary fix or do we as citizens take responsibility and say we have to adjust our lifestyle?”

Comments

moncurcool 5 months, 2 weeks ago

I am beginning to wonder why in the world the Tribune keeps going to this man for input. His suggestion is to take public transportation. I wonder if he has ever taken public transportation in the Bahamas?

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sheeprunner12 5 months, 2 weeks ago

I agree. Gowan Bowe lives in a bubble and not in tune with 99% of Bahamians. He is an elitist

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ohdrap4 5 months, 2 weeks ago

He likes taxes. Remind me not to vote for him.

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Sickened 5 months, 2 weeks ago

Wow I'm disappointed at Gowon's response to this issue. Gov't can put a cap on their tax on gas. If they were getting 60 cents a gallon before then they should be happy getting 80 cents now. Why do they need to now collect $1.50 a gallon - or whatever their crazy high amount is?

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DDK 5 months, 2 weeks ago

Mr. Bowe, YOU are unwise. The Government simply cannot continue to tax the people, the business community and our visitors to death in order to satisfy its greed. Tax is fine as long as it isn't squandered and stolen. Like NIB, all cash cows eventually run dry. Wake up and smell the coffee, man! Do you Nassaucentrics even consider the folks in the Family Islands when you run on about public transportation? When last did you take public transportation? The country is facing a real crisis and you are spouting drivel about the tax structure on fuel and car pooling. Whose car are we going to pool when there is no gas at the pump? You make me quite ill.

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sheeprunner12 5 months, 2 weeks ago

He owns shares in Snake's company, hey?

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M0J0 5 months, 2 weeks ago

He has some valid points, maybe not worded the best way, but he is simply saying the spotlight is being placed on the government when it should be placed on the companies fuel is being received from, the gov. does not control the price, suppliers do and the gov. did not raise the tax it stays current and is based on fuel price. We cannot control gas prices unless we are producing it locally.

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Sickened 5 months, 2 weeks ago

Gov't tax is almost the same as the cost of fuel in the container ship. That's way too much at this price. So of course gov't has a HUGE impact on the price of gas. When the original price used to be $1 and the gov't added another 80 cents that was affordable. Now when the original price of gas is $2 and the government wants to add another $1.60 to that???? Way to much.

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bobby2 5 months, 2 weeks ago

The Government should evalate the average cost of gas over the last five years & on that average dollar value, invoke the VAT on that amount for a set period of time. Rather, than the current escaluting tax amount based on rising price of gas. The Gov't will be collecting the same amount & just not enjoy a windfall in tax revenue.

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birdiestrachan 5 months, 2 weeks ago

Mr Bowe is 100% correct.

The wise will understand what he is saying is true. It makes sense.

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birdiestrachan 5 months, 2 weeks ago

There are a whole lot of people looking to the Government for help where will it come from? not for gas stations in fact they want to put pump attendants out of work. take the bread out of their mouths.

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Flyingfish 5 months, 2 weeks ago

Mr Bowe is right

good and bad. These fuel companies at the end of the day are still rich and holding this country by an economic leash but at least consumers can get a lower price.

But you know what would save Bahamian people the most money Good Public Transportation, Renewable energy, electric/hybrid cars, and a general less dependence on oil/gas a resource we don’t make.

It’d be cheaper and Bahamians would be more economically empowered but the Fuel Barons and their government friends wouldn’t let it slide.

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tribanon 5 months, 2 weeks ago

I remember when Bowe repeatedly told us that the introduction of VAT was absolutely vital to our country's ability to pay down its national debt. Of course Bowe now sings a different song, saying the introduction of VAT was a necessary evil to slow down the rate of growth of our national debt.

But our national debt has increased exponentially since VAT was introduced. Bowe just doesn't understand that you never feed corrupt and incompetent governments more tax dollars to be squandered on growing an already over-bloated and unproductive civil workforce, and to outrightly steal through fraudulent schemes of every kind imaginable.

The sooner we get a long Gasoline Tax Holiday the better. Too many of our people are now hurting and suffering and their increasing desperation is palpable everywhere in our nation.

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