The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Bahamas Federation of Retailers (BFR) yesterday questioned how one of the Government’s leading Value-Added Tax (VAT) consultants could “lecture” Bahamians on the need to pay taxes when he was in default on his own.

Responding to reports that Ishmael Lightbourne, the co-ordinator of the Government’s VAT implementation unit, has not paid real property taxes in his home for 10 years, the Federation, which represents more than 100 retailers, said the issue brings into focus the “fundamental disconnect” between the Government’s attitude towards taxes and the tax payers.

Highlighting the hypocrisy, it said: “Why should we, the people of the Bahamas, be lectured about the need for new taxes from someone, if it is indeed the case, who hasn’t paid their taxes?

“Why should we, the people of the Bahamas, listen to someone who is breaking the law by not paying the taxes they are legally obligated to pay to their government? Why are so many of our people able to avoid paying their existing taxes, and how is it that our government is unable to collect what they are legally owed?”

The Federation added: “It also raises the question of how many MPs owe taxes to the Government? How many government corporations fail to pay their taxes? How many contributors to the major parties are able to avoid paying their taxes? What will stop them from avoiding VAT as well?

“If we can’t fix the existing system, then why should any of us have confidence that a new tax system will work better if it is more complicated to administer?

“Fixing the existing system would have been smarter. The IMF estimates that the Government, in recent times, only collects about 25 per cent of the taxes it is legally owed. This was true for both the FNM and PLP administrations, so this is not a party issue. This is a Bahamian issue that cuts across parties and politics.”

The Federation continued: “This is a citizen’s issue. By global standards, that low rate of tax collection is dysfunctional. It is no wonder that our deficit and debt have soared over the last few decades if our government is only collecting about 25 per cent of what they are legally owed.

“There is no excuse for that. They are the Government, and they have the power of the law on their side. They are legally obligated to collect all taxes from all citizens equally, without favouritism. It is a failure of governance and it points to a deeper cultural problem with respect to the payment and collection of taxes. VAT will not fix that problem.”

The Federation further charged: “The deficit and debt exist because people who should be paying the existing taxes, NIB, real property and Customs dDuties, which, by law, they are legally obligated to pay or suffer consequences, use their government connections to get away with not paying their taxes.

“Instead of the Government punishing tax avoidance, it gives discounts and amnesties to those who avoided paying while doing nothing for those who paid on time. The message is: ‘Don’t pay on time, we will then give you a tax break at a later date’.

“If you ran a business that way, you’d be broke, too. This pattern of neglect and and favouritism, compounded over decades, has resulted in government not collecting the revenue it is legally owed which, in turn, has led to our massive deficits. It is the primary reason for the Bahamas having a debt of $5 billion today.

“Government should enforce the existing taxes instead of introducing a complicated tax like VAT in the middle of our nation’s economic recovery from the deepest recession in living memory.”

The Federation said new taxes, without focused and serious fiscal reform, are “simply not the answer and will fuel unemployment”.