The Tribune

EDITOR, The Tribune.

After all that I and others have written about VAT, I just want to make two quick points:

First, we have recently heard from two New Zealand experts how smoothly a VAT-type system works in that country. That’s fine, and I am sure they are correct. But nobody has underlined that New Zealand, like most developed nations, also levies personal income tax.

Those countries reap as large, or larger, a portion of their revenues from income tax as from VAT or other transaction taxes.

That leads to my second point, for which I will doubtless be vilified by many Bahamian friends.

VAT is not the answer for The Bahamas, because it does not hit the rich.

Lawyers, doctors, accountants, corporate executives, government ministers, investors, or consultants like me will only suffer indirect pain from VAT.

Our incomes, in the form of fees, commissions, salaries, dividends, interest and capital gains, will remain untaxed.

In the modern world, that free ride won’t work.

The Bahamas must shelve the outdated dream of advertising ourselves as a tax-free paradise.

We can profitably follow the Panama example of taxing local-source income while exempting companies whose income is foreign source.

They pay attractive management fees to Panamanians —a business that I understand is booming as always.

RICHARD COULSON

Nassau,

April 29, 2014.