The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s finance spokesman yesterday sparked a full-blown House of Assembly row when accused the Davis administration of “governing in the dark” by failing to publicly disclose the data justifying the elimination of VAT on unprepared foods.

Kwasi Thompson, the east Grand Bahama MP, asserted that the Government owed it to the Bahamian people to explain, and quantify, the benefits they will enjoy as a result of all uncooked foods going from 5 percent VAT to zero. Arguing that it was “about being transparent in governance”, he also challenged the Davis administration to confirm if this is “temporary cost of living relief” or a change intended to be long-lasting,

His comments sparked push back from Wayne Munroe, minister of national security, who branded them as “disingenuous” while asserting that his Cabinet colleague, Michael Halkitis, minister of economic affairs, had explained the rationale for the unprepared foods VAT elimination come April 1, 2026. He also accused Mr Thompson of “denigrating” Ministry of Finance officials by implying the move was not supported by empirical evidence.

And Dr Michael Darville, minister of health and wellness, hit back over the former Minnis administration’s decision - of which Mr Thompson was part - to hike the general VAT rate from 7.5 percent to 12 percent in 2018 while eliminating the tax on what Mr Munroe said was just “22” bread basket” food items.

Arguing that these ‘bread basket’ foods, such as white sugar and butter, have “poor nutritional value”, Dr Darville asserted that the Minnis administration’s VAT policy “pushed” Bahamians away from purchasing more “wholesome” foods and instead towards some of the very products causing this nation’s high rate of chronic non-communicable diseases (NCDs) such as diabetes, heart disease and hypertension.

The exchange occurred after Mr Thompson attacked the Government’s failure to disclose the data, studies and empirical evidence justifying the decision to eliminate VAT on unprepared food. In the absence of such disclosure, he argued that it did not appear to be part of any coherent tax and revenue strategy and, as a result, it threatens to “shrink fiscal space today and create pressure for higher taxes tomorrow”.

“What is most concerning is not merely that this relief has come late, but that it appears to have come without transparency, without analysis and without accountability,” the Opposition’s finance spokesman asserted. “The Government has provided no clear assessment of what the average Bahamian household will actually save, no explanation of the assumptions used, and insufficient indication of the impact on the country’s fiscal position.

“These are not academic questions; they are fundamental to public trust. Time and again, this administration announces tax changes through headlines rather than evidence, leaving Bahamians in the dark about both the benefits and the consequences.

“Without clear answers, these VAT exemptions risk becoming politically popular gestures that shrink fiscal space today and create pressure for higher taxes tomorrow. Sound tax policy demands foresight, data and openness - not retroactive corrections after years of public pressure.”

This prompted Mr Munroe’s first intervention. Noting that Mr Thompson was suggesting the unprepared food VAT elimination was “done without proper explanation, without proper thinking”, he also countered that the east Grand Bahama MP was being “disingenuous” since he was questioning an action that he and the Free National Movement (FNM) had long demanded the Government take.

The Opposition has called for the removal of VAT on food and medicines since the Davis administration reimposed the levy at 10 percent following the September 2021 general election. However, Mr Munroe argued that Mr Thompson and his FNM colleagues had only called for the reinstatement of VAT relief on the 22 ‘bread basket’ items and not all unprepared foods as the Davis administration has now expanded it to.

“We did call for all,” Mr Thompson asserted in reply. “The point is the people you are making a decision for have a right to understand how you came to make that decision. It’s about being transparent in governance. The people should understand the process you went through, the data you went through, to make the decision you made.

“We have a right to understand that. They unfortunately do not get it. They do not get it; do not get that. If you make a decision for people, we have a right to understand the process you went through, the data you went through to make that decision. We are not faulting you for making that decision; we are saying show the evidence, show the data, have the Ministry of Finance explain what they went through to make the decision.”

The Government previously said it will forego around $15m in annual VAT revenues by eliminating the tax on unprepared food, and Mr Munroe said Mr Halkitis had explained the Government’s rationale for doing so as part of further efforts to ease cost of living pressures on hard-pressed Bahamian families.

Arguing that the Opposition challenges everything the Government “does economically”, Mr Munroe suggested that criticism was part of “silly season” with a general election approaching but warned against “denigrating” Ministry of Finance officials - something Mr Thompson denied doing.

“The policymakers are obliged to explain to the public,” the east Grand Bahama MP added. “What I am saying, madame speaker, is what the public is saying, what we on this side have said.. that this government is operating in the dark, policymakers are not explaining about what is happening.”

Dr Darville then intervened by pointing to the former Minnis administration’s decision to hike the VAT rate from 7.5 percent to 12 percent - an increase that included “wholesome foods”. He added: “You turned around and zero-rated VAT on bread basket items - white sugar, butter and white flour.

“That’s what you didn’t realise. They are not good for you. You obviously didn’t understand nutrition. You don’t understand nutrition…. By reducing VAT on those food items that are poor nutritional items, and increasing VAT on wholesome foods, you pushed the Bahamian people to purchase those poor nutritional quality foods.”

Dr Darville said the Davis administration is now tackling the diet and nutrition issues that he alleged was “brought on by the poor policies” of its Minns predecessor, and argued that eliminating VAT on all foods - wholesome and bread basket - will give Bahamians the “opportunity to choose wisely”.

Mr Thompson, though, found a new attack angle by calling for the removal of VAT on all medicines as well as foods. Dr Darville countered that transferring the National Prescription Drug Plan from the National Insurance Board (NIB) to the National Health Insurance (NHI) scheme would expand access to free medicines from 44,000 persons to 161,000 persons.

The Opposition’s finance spokesman, though, closed by challenging whether the VAT elimination on uncooked foods is intended to be a “temporary cost of living” relief or if it is part of a wider, long-term strategy. “The VAT off of food that has been announced, the question I wish to raise is if this is intended as temporary cost of living relief or is this part of long-term structural tax reform?” he asked.

Mr Thompson also queried what measures the Government is taking to offset the $15m revenue loss, and asserted that it should have maintained the 12 percent VAT rate that the Minnis administration imposed on real estate sales worth above $2m. The Davis administration reduced this to 10 percent.