THIS one is going to be a little hard to justify for the administration.
Outside the normal Budget process, a tax break is being introduced for the rich. The ten percent duty rate on “pleasure vessels” is being eliminated.
The move comes in a memo sent to the Customs comptroller by the financial secretary, Simon Wilson. The FNM obtained that memo and has released it.
Now, we’ll come to the process by which this tax break has been introduced in a moment – but let’s consider for a moment how there was a lot of talk when the government added VAT back on to breadbasket items.
Economic Affairs Minister Michael Halkitis talked about how it was “not feasible” to remove VAT on breadbasket items – a declaration that we said in this column was nonsense. Of course it was feasible – it hadn’t been applied previously, it was a choice to put it back on.
Minister of Education Glenys Hanna Martin said how she struggled with the decision to add VAT back onto breadbasket items. Her honesty was admirable. She said: “Personally I am hoping that we will see VAT come off food in general but I think the rationale was – and this is something that I myself struggled with – but the rationale was what the government did was reduce VAT to ten percent. So, it took the global pressure off the Bahamian people.”
She went on to say that any hardship that was experienced would be offset by the work of the Department of Social Services and other agencies.
But how can one justify adding VAT on a loaf of bread, but scrapping the tax on a yacht?
When every penny counts, so we’re told, and when the financial equations of the government are so delicately balanced that international agencies are doubtful whether targets can be hit, what bright spark decided that now is the time to take off that oh so onerous tax on pleasure vessels?
And now for the process – if the government was going to do it, why not include it in the regular Budget process? Supposedly it was left out by mistake – does that sound likely to you? What kind of mistake leaves out an entire section of tax being eliminated? Does that make the sums fail to add up? What other mistakes have there been?
Kwasi Thompson, the former Minister of State for Finance under the Minnis administration, had his own question. He said: “Our question would be: On what legal basis are you changing the tariff without Parliament’s approval because when it comes to changing tariffs that is changing legislation, which means that you have to get Parliament’s approval to do so.”
He added: “Nobody knew the government was taking this policy decision. It has to come to the people and explain what it’s doing and why. What is the justification for making pleasure yachts duty free?”
Yachts are expensive, priced in the multiple millions, so a ten percent tax would bring in a sizeable income for the government. Who lobbied them to remove it? Is anyone in government planning to buy themselves a pleasure vessel any time soon and due to get a nice saving because of this?
So next time you tut at the price of the loaf of bread, and how it is ten percent higher thanks to the VAT on it, remember – at least the super-rich are saving money on their yachts.
We suggest that you read the Insight article by Malcolm Strachan on page nine today. As we approach the 49th Independence celebration, he details some of the things holding our nation back – and more importantly asks where are we going next.
The problems are all too easy to list – you could do so yourself. Power outages, broken-up roads, a political environment that takes forever to move on issues such as marijuana legislation or marital rape laws. Then there’s things such as government transparency or the lack thereof.
It’s not just a list of complaints, however – it’s a question. What is our ambition?
We would love to hear from readers where they think we should be going next, as we count down to our 49th anniversary.