The Tribune

THE much-feared Value Added Tax (VAT) bill was rushed through parliament this week — and the only persons who seemed proud of the achievement were government members who, in the words of Labour Minister Shane Gibson, had to find money to pay government’s bills.

East Grand Bahama MP Peter Turnquest (FNM) noted that it seemed the Opposition was arguing a futile case as the government had already decided that VAT would be coming, “hell or high water”.

“So” he asked, “who are we, the Bahamian people, the citizens to question – after all the IMF have already agreed, the New Zealand and US consultants have designed it, the World Bank has blessed it, the credit rating agencies say it’s the best thing for us. So what do we know, the Bahamian people?”

Apparently, nothing. It is difficult for Bahamians —a people unaccustomed to taxation — to grasp all the implications of this 7.5 per cent tax, which will be added to those items subject to customs duty. As Mr Turnquest pointed out not only will VAT have to be paid on purchased goods, but it will have to be paid on the landed price of those goods, which will include freight, insurance and brokerage fees. As he says if VAT is to be paid on top of duty, it should only be paid on the goods.

In the beginning, Bahamians were made to believe that the Bahamas would be in dire straits and our credit rating would be threatened if we were not members of the World Trade Organization (WTO). However, it has never been explained how the Bahamas, which is not a trading nation, would or could benefit from such membership. According to WTO “its main function is to ensure that trade flows as smoothly, predictably and freely as possible”.

This would mean that Customs duties, to put us on the same footing as the world trading markets, would have to go and be replaced by another tax – hence VAT.

However, as time passed the need for WTO dropped into the background and the real importance of VAT became clear. It was considered the best way to raise taxes to reduce our national debt. If not, the rating agencies, such as Standard & Poor, would keep us in the negative bracket, making the possibility of future borrowings in the international market difficult, if not impossible.

Although at first avoided, the government can no longer get around the fact that VAT is a consumer tax, which will hurt the consumer as businesses will be forced to increase the cost of their goods.

Recognising that in the end many Bahamians will not be able to meet the tax burden, funds for social services will be increased to help put food on the table of the needy.

In other words, the Bahamas is being pushed into a welfare state for the working man and woman to support.

There has been no mention, nor has government shown any signs of setting an example by cutting government’s expenses. It would seem that we are to be taxed so that they can continue on their wanton ways — travel with their staff, open new consular offices and the like – thus spending continues.

Leslie Miller, chairman of the Electricity Corporation, might be called a “Pot Cake”, and a “Cave Man”, but one thing no one can deny – he is a businessman who understands that the cost of electricity cannot be reduced unless the corporation is operated like a business. He has earned the hatred of the unions because his every attempt to introduce sound business practices interferes with their members. And now, while he struggles to bring costs down, government plans to add the 7.5 per cent VAT tax onto a service that many consumers at present rates cannot afford. No wonder Mr Miller wants VAT excluded from the corporation.

The only answer for reduced electricity is to sell the corporation, remove all traces of government and turn it into a service that can support itself. Not only is BEC overstaff — as is the whole civil service—but it salary structure is such that this country can no longer support it. As Mr Turnquest told parliament, BEC “has been the biggest tragedy and farce that has been allowed to happen for years”.

Instead of turning the Bahamas into a welfare state, Mr Turnquest urges that ways be explored to encourage businesses to grow and create jobs.

“A lot of reform needs to be done in the public sector,” he told parliament, “and it begins by looking at the public corporations and agencies we have and looking at divesting themselves of state owned corporations because they recognise that the state has not done a very good job of managing those resources.

“No matter how you cut it,” he told parliament, “no matter how you rationalise it, or how good the intent is at the end of the day political pressure is brought by constituents for jobs and for contracts and the like. And so at the end of the day there is so much external pressure that the political directorate influences the boards to take care of their cronies, to not make business decisions, but political decisions. As a result these public corporations, which should be lucrative, end up being cash drains. It is time for us to look at these corporations urgently, transparently and in an independent manner.”

As he rightly said, “it can no longer be deals for friends”. He referred to the rumours swirling around about various deals, including the city dump, which, if any of them is true is “another sad indictment on our country once again and on this government”.

No wonder this government is so adverse to introducing the Freedom of Information Act. This Act, which was passed by the Ingraham government just at the end of its tenure, is only awaiting a date to be affixed for its implementation. However, the Christie government says it wants to make amendments. They have been the government for more than two years and are yet to put pen to paper. With what is being said in the market place, we are not surprised.

Mr Turnquest told the House that he did not believe “that it is the government’s job to create jobs for people, certainly not to make up jobs just to say you are employing people. It is the government’s job to create an environment that business can prosper. And by outsourcing, you are creating an environment and you are moving people from this class to the productive sector, a contributing class. So they go from being a drain on the public purse to being a contributor to the public purse. There are ways to do this. I am not suggesting at all, so stop the stupid talk that we cut people from the public services. What I am suggesting is that we transition people from the public sector to the private sector through incentives, through contracts, through attrition and retirements. There are too many people in the system clogging the system, being unproductive, and the only way to improve our system is to bring fresh blood and to refresh the system and to transition those people who need to be transitioned. This is not easy, but it needs to be done if we are going to survive.”