The Tribune

By DANA SMITH

Tribune Staff Reporter

dsmith@tribunemedia.net

Dubbing the Government’s current revenue collection methods as “unsustainable”, the Financial Services Minister yesterday announced public consultations on tax reform will begin shortly.

Ryan Pinder explained the the Government’s current tax structure is not “sufficient to meet the needs of a 21st century government”, and spoke on the economy’s “overreaching” need for tax reform.

“The financial state of the country is very precarious and requires significant reform,” Mr Pinder said.

“This is very clear by the recent downgrade by Moody’s that observed the serious state of the debt, deficit and financial affairs of the country that has developed over the past five years. But, frankly, we don’t need Moody’s or any other international agency to tell us this. One just has to look at last year’s Budget.

“What has become increasingly clear is the current way in which the Government assesses and collects its revenue is unsustainable, especially in the light of fixed commitments of government expenditure.”

He added that it was clear that the “inefficiencies” of the current collection system had put a “financial strain” on the country’s revenue.

“It is anticipated that the need for reform will likewise be affected by the economic evolution of the Bahamas,” Mr Pinder said.

“For example, in the context of trade liberaliaation through our commitments under the EPA - which we signed into effect in 2010 - and the anticipated accession to the World Trade Organisation, given the natural reduction in tariffs rates that come as a result of this trade liberalisation policy, tax reform is a necessity.”

Mr Pinder said it was “increasingly apparent” that government revenues were not keeping pace with expenditure, and the introduction of an “alternate tax regime with broad, multifaceted coverage” could compensate for losses stemming from tariff reductions and create the needed increase in revenues.

“Our tax base is a very narrow tax base and completely leaves out the services industry,” he said. “Given the fact that our economy is largely a service-based industry and economy, the Government is forgoing significant tax revenue.”

Proposed tax reform suggestions have already been prepared, and will “soon be released” to the public for consultation, Mr Pinder said.

“Consultation on an issue as this is fundamental because the issue itself is fundamental when you talk about tax reform,” he added.