The Tribune

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

THE National Development Plan will recommend that the country’s tax system be transformed to become more progressive and efficient, according to an NDP draft released online.

The Christie administration implemented value added tax (VAT) in 2015, responding to a need for more revenue to reduce the national debt and deficit.

While that change has been met with calls to improve government revenue collection processes, particularly with regards to real property taxes and customs duty, politicians have not indicated since then that further tax reform is in the country’s future.

The NDP could change that.

It is intended by the government to be a seminal document that enjoys bipartisan support.

The University of the Bahamas will be responsible for releasing reports that evaluate how successful the country is at implementing the plan, increasing pressure on politicians to implement the changes.

Regarding taxes, the NDP draft says: “Taxes are the main source of government revenue and the efficiency of their collection impacts government’s ability to deliver on services. Currently the government of the Bahamas relies heavily on indirect source of taxes with some significant leakages from the revenue stream. Property taxes are mainly levied on foreign homeowners and Bahamian homeowners in New Providence. The current project to improve customs collection is to be commended but only 40 per cent - 60 per cent of property taxes are collected. Further as residents call on the government to provide better and more social services, the narrow tax base may be insufficient to fulfil these needs.”

The NDP said a lack of commitment by the government to change, a lack of understanding by the public about the link between government revenue and the provision of services and a cultural bias against direct taxes are responsible for the general lack of tax reform in the country.

A four per cent annual increase in tax revenue would indicate success in reform, the NDP said.

The plan does not propose which taxes should be implemented, calling instead for a review of the existent system to identify its general impact, especially on businesses.

The plan calls for an evaluation and implementation of a revenue system that would diversify the tax structure.

It called for a tax structure that is more progressive, indicating the tax rate paid by a business or person should increase as the taxable amount of that business or person increases.

During the debate about VAT, some Bahamians called for the introduction of an income tax, emphasising its progressive nature as compared to VAT.