By EARYEL BOWLEG
Tribune Staff Reporter
ebowleg@tribunemedia.net
A TOP financial expert believes it is the time to have a discussion about corporate income taxes for companies in The Bahamas.
Fidelity Bank’s CEO Gowon Bowe said: “We’re 20 years late, so we’re catching up.”
His comments came after it was reported that the government is leaning towards reforms that would see most Bahamas-based businesses pay a "modest" corporate income tax of either 10 or 12 percent, with the only exception being small firms earning less than $500,000 annually.
The “green paper” on corporate income tax strategies for The Bahamas outlined four options.
Asked for his opinion on introducing a corporate tax, Mr Bowe said on Friday that any individuals who make what he called an “asinine statement” that such a tax will not be good for the economy and business, is not “worthy of your time and effort in terms of discussion”.
“The reason why I say that is the Bahamian economy is one that has to look at how it modernises itself to ensure that its tax system is, one, equitable. So meaning that it is devised on an ability to pay and so that it is distributed amongst those based on their capacity to pay. Secondly, that it allows there to be the meeting of government expenses because the society is not demanding any less in terms of services, and thirdly, that it will enable the expansion of the economy.
“I look at those three . . . components individually I think, first, it's important to note that this is a paper that is out for discussion and has the opportunity to effectively get feedback as to the pros, cons, areas of concern, that may not have been considered areas of opportunity, so it is a far way away from being a fait accompli.
“Secondly, when you look at the world environment, the truth of the matter is that you know how many countries exist without income tax?” he said. “It's not saying well (if) everyone is jumping off a cliff to do so we must do so. But more importantly, it is saying that, do we want to be the last of the Mohicans when we become extinct like dinosaurs, and the country has been blacklisted for the absence of income tax?”
He mentioned The Bahamas already has a form of income tax in the form of business licence.
“It is disproportionate on domestic businesses and businesses domiciled here and operating internationally, and the way the world is now structured, this is not an area that there's a disparity, and you hear the term ‘ring fencing’. So really, if you're earning income, you have a corporate responsibility to contribute to the coffers of the country in which you're earning the income.”
In terms of the global minimum tax rate of 15 percent and the four options that have been put on the table, Mr Bowe admitted he has not seen the empirical study behind each of the numbers.
However, he thinks what it has clearly demonstrated is there will be a contraction in the economy. He explained that happens whenever there's an increase in taxation because more money is taken out of the private sector and put into the government coffers.
Mr Bowe added that he has not studied the options in the green paper enough to pick a particular one and that the paper needs to be digested, criticised and have the pros and cons looked at.
“So I am wise enough to know that the government systems are not yet sophisticated enough to handle income tax,” he said. “I know that not all businesses are at a level where they are familiar with filing financial statements on a consistent basis, which will be required, although we have made a tremendous move forward by Value Added Tax because you have to file that at a minimum on a quarterly basis.
“And I also know that ultimately the understanding of the tax law is one that will take time and effort. And so I know this is not something that is going to be implemented within the next three to five years in any meaningful way. Because you would have to first get the foundation laid in order to do so. But I'm certain that any government that fails to study this now and make a decision now is shirking their fiscal responsibility.”
Comments
ThisIsOurs 11 months, 2 weeks ago
The issue isnt that taxes are bad, even though noone likes them, the issue is our administrations have shown over and over again that they are terrible at realizing the benefits put forward in the "theoretical" papers. VAT was supposed to eliminate customs duties. It all sounded good. Not only didnt it do that, it doubled and customs duties remained and taxes and fees increased everywhere.
Our problem is we have no ethical framework in which to run these systems. On the surface it seems like an unrelated issue.
Ive heard people say things like whats wrong with accepting a nice watch, whats wrong with taking a plane ride, whats wrong with taking money from the company Im supposed to be regulating, and when good people dont see the dangers in that, no tax/revenue collection system will ever work. Because we will use that tax revenue over and over again to hand away to people and companies who give us favour as opposed to people and companies who give best value for the dollar. And we will forever be in a cycle of we dont have enough.
Local govt is another "good" system that is doomed without changing us. All it will do is spread the number of people willing to silence voices, because you "irritated" me and I have the power, spread the number of people handing contracts to people they know and like and spread the number of people looking to benefit from access. Not because its a bad system, but because it has no ethical framework in which to run. Ethics can be legislated to a certain point but it needs a mindset shift as well.
DWW 11 months, 2 weeks ago
last point is fatalist and short sighted. at least more people get access to the contracts and not just 1 "lucky" guy in nassau. nassau centric statement
ThisIsOurs 11 months, 2 weeks ago
Not fatalistic at all. I listen to the conversations around local govt and the scariest thing for me is that the proponents have such confidence that once you put power in the hands of the people, everything will change. I think this is the same 1967 approach. What we actually found was the people who were just like us ended up acting just like the oppressors. My advocacy is to get the environment right. The biggest is financial accountability with penalties that have teeth so people know its not ok to give the landscaping contract to my cousin, just because he's my cousin, its not ok to fast track the crown land approval for the man who worked really hard on my campaign. These practices have to be abolished if we're to get anywhere. Otherwise all we'll do is change the faces of the abusers
ThisIsOurs 11 months, 2 weeks ago
And then there are the people who will use power to block voices. This is already happening without power and aided blindly by other "well" thinking individuals. What will happen once they have governmental power?
Hostall 11 months, 2 weeks ago
nicee
bahamianson 11 months, 2 weeks ago
Society is not demanding anything less in service? What service , Mr. Bowe? Does the society get service from Bpl, btc, WSC,the policeforce, immigration, customs, and all others? Man, the service is piss poor in the Bahamas. All we do is pay salaries that are undeserving. My goodness, let us not talk about NIB and ZNS. Wait, what about the terrible roads, flooded streets, ugly, unpainted government buildings, workers whom come in after 9am , take 2 hour lunches, look at you like you are doing them a favour, and leave at 2pm not to cime in again. I ask again, what service? This place is a CHIP hole!!
DonAnthony 11 months, 2 weeks ago
I always say we want and expect first world services but only want and expect to pay third world taxes. Reality is that we are under taxed. The % of government revenue as a % of GDP is low even compared to other Caribbean economies much less first world economies. With all the corruption and inefficiencies in the public sector, govt revenue is woefully inadequate to provide the level of services we desire, hence our never ending budget deficits. We need an increase in govt revenues (taxes) that fall more on the rich ( very hard to do) and of a less regressive nature than we currently have. At the same time we need to downsize the public sector, get rid of or reduce subsidies to public corporations and then demand increased productivity from our reduced civil service, along with a zero tolerance of corruption.
DWW 11 months, 2 weeks ago
totally false statement. try again. this guy needs to look at the actual numbers. What percentage pf the work force is employed by govt. what percentage of GDP is spent by govt every year? do you know how much revenue the govt makes this year? go check these numbers and then come back and make this silly statement. me thinks you must be one of the lucky ones with sweetheart govt contract.
ThisIsOurs 11 months, 2 weeks ago
We cant be undertaxed. Or rather its unknowable. What we do know is our taxes are badly managed, if theyre badly managed we cannot determine if we have "enough". No govt charges taxes just to hoard money. Too much money comes into this country we should be the last place on earth with crumbling infrastructure. Where is the hole in the bucket?
DonAnthony 11 months, 2 weeks ago
We are unquestionably undertaxed. Read Bahamas!
https://www.bahamasbudget.gov.bs/medi...">https://www.bahamasbudget.gov.bs/medi...
While vital within the context of the Government’s fiscal strategy, a revenue to GDP revenue ratio of 25 per cent is not unreasonable in and of itself or when viewed internationally. Within the advanced G7 nations, the revenue ratio amounts to some 36 per cent; in the Euro area it averages roughly 46 per cent. Latin American and Caribbean countries post an average ratio of 27 per cent with regional rates of 30-31 per cent in Jamaica, Barbados and Belize.
DonAnthony 11 months, 2 weeks ago
In 2021/2021 Bahamas govt revenue as % of GDP was just 20.2%!
ThisIsOurs 11 months, 2 weeks ago
I get your theoretical point, my point is we could be taxed at 50% and the roads would still be crumbling. Why? Because when revenue increases the bid prices on contracts will increase. I remember clearly when every bid submitted for a govt building jumped exponentially to 20m. Uncanny. With our current system "undertaxation" has no meaning, we'll never have enough
DonAnthony 11 months, 2 weeks ago
Not theoretical, it’s fact, reality.
ExposedU2C 11 months, 2 weeks ago
LMAO. Is this the same Bowe guy who told us years ago when government was considering the introduction of a 7.5% VAT that such a VAT was desperately needed to replace customs duties, business license fees and reduce the level our national debt?
And no sooner were the Bahamian people duped by all that gibberish, then Bowe began singing how he really meant reduce the growth rate rather than the level of our national debt, and that customs duties and business license fees would have to remain and be supplemented by a whopping increase in the VAT rate from 7.5% to 12% at the time.
Now we see Bowe supporting the minimum 15% income tax rate the OECD is pressuring our government to introduce which, once introduced, will undoubtedly quickly become 20%+ just as the VAT rate all to quickly increased. This would be the proverbial straw that breaks the camel's back for many Bahamian owned businesses, leaving many more Bahamians unemployed with no place to turn but the government, either for a job or outright handouts of one kind or another.
Why is it we never here this guy Bowe talking about ways in which the government can reduce its bloated size and waste, and become much more productive? He seems to endorse a monsterous non-productive government as a necessary social welfare scheme to help drive the consumer lending business of the domestic bank that he runs as CEO.
B_I_D___ 11 months, 2 weeks ago
Yeap...VAT was pitched to replace import duty...what do we have now...import duty and added price control...and HIGHER VAT...GVMNT TALKING SHYTE...
TalRussell 11 months, 2 weeks ago
The held in high esteem, Fidelity Bank’s CEO, Comrade "BankerMan's", Gowon Bowe. --- Has long known before penning this piece ... That there's no forward-thinking --- Is constructively possible --- That will brung' about --- sweeping' electoral change.--- For as long as we keep on electing' --- familiar faces' candidates. --- Offered under the colours of the two mainstream parties. --- When bcoms' the official results of General Election Day --- A set number Members (SNM) to the House of Assembly (HOA) --- Whilst content on electing a majority from the --- First Candidates Past the Post FCPP. --- To then --- Call upon the governor general. ---- To be officially be recognized as the majority of sitting' members of the (HOA) ... Whom, collectively, shall be duly invited be sworn-in as the King's --- Rulers as the colony's --- Official set of governing politicians'* --- No No Yes Yes?
BONEFISH 11 months, 2 weeks ago
What Gowon Bowe say is true. Discussions on tax reform should have been done over twenty years ago.Hubert Ingraham to his credit saw it and attempted to make changes. He had intended to implemented the vat if the FNM was re-elected in 2012. The international community will start to pressure this country to change it's tax system.
TalRussell 11 months, 2 weeks ago
@ComadeBoneFish, here's a Sunday --- Made-easy Currency Remittance Trap -- takeaway. --- When 1 out 5 who make up the colony's total 514,444 popoulaces' --- Are foreign-born. --- Something' cannot be easily dismissed by a Bank’s Comrade CEO. --- Whose bank's KYC policy -- Must surely be up on awareness that it has many foreign-borned account holders. --- No No Yes Yes?
Hostall 11 months, 2 weeks ago
nice
Hostall 11 months, 2 weeks ago
What Gowon Bowe say is true. Discussions on tax reform should have been done over twenty years ago.Hubert Ingraham to his credit saw it and attempted to make changes. He had intended to implemented the vat if the FNM was re-elected in 2012. The international community will start to pressure this country to change it's tax system.
ExposedU2C 11 months, 2 weeks ago
Hubert Ingraham's legacy will always be kicking the democratic chinese from Taiwan out of the Bahamas in 1992 and replacing them with the evil communist chinese regime. And just look at what that has done for our country and people, especially in Grand Bahama.
Baha10 11 months, 2 weeks ago
Being forced to lap up Bowe’s regularly offered financial advice is becoming tiresome … ever since the days of Piracy, The Bahamas has had a culture of not abiding by Laws, much less paying Taxes of any description, as demonstrated by the “wheeling and eating” that occurs daily in virtually every facet of life entailing a financial obligation … “what’s my discount, gimme a break, I ga need a tip to get you straight, you know who I is, etc, etc.”
Nonetheless, there is more than an enough revenue “already” being collected to fund this Country … which means the focus should be not on more Taxes, but rather “cutting expenses” and improving efficiency, neither of which guru Bowe even bothers to mention.
One thing is for sure, no Country can tax itself to prosperity, indeed most developed Countries are desperately trying to “cut” Taxes, not increase, but perhaps Bowe is still reading the history chapters on the “once” Great Civilizations of the World and has yet to get to why they all eventually failed🤷♂️
ExposedU2C 11 months, 2 weeks ago
Amen to that.
BMW 11 months, 2 weeks ago
No matter the amount of money generated and collected by thee government there will never be enough!! It will all disappear into the black hole of corruption!
ExposedU2C 11 months, 2 weeks ago
And Bowe knows this to be true, but refuses to tell it like it is. Therein lies his credibility problem. More taxation before any serious reform and downsizing of government has occurred is just more pain and hurt for Bahamian taxpayers for absolutely nada in return. You don't feed a growing deadly cancer with what it wants and needs to grow bigger.......you must instead starve it as much as you possibly can.
That's just plain 'ole common sense.
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