FNM Chairman Darron Cash
By AVA TURNQUEST
Tribune Staff Reporter
aturnquest@tribunemedia.net
FNM Chairman Darron Cash yesterday blasted the government for its “gut-wrenching” decision to apply Value Added Tax to electricity bills.
He also questioned the government’s rationale for apparently not exempting private health care from the new tax, suggesting that it will place quality health care out of reach for most Bahamians. The new VAT bill says that health care services specifically for services provided to “public patients” receiving free care at public facilities will be exempted from VAT.
“A most disappointing aspect of the proposed law is the application of VAT to BEC bills,” Mr Cash said in a statement to The Tribune.
“This gut-wrenching news comes at the same time that BEC is advising struggling Bahamians to pay their (overdue bills) or avoid disconnection. While the corporation is taking a hard line, the executive chairman is acknowledging just how difficult it is already for people to pay their bills in these perilous times.”
He added: “At the same time the Christie government is (proposing) National Health Insurance to increase access to care, they are adding VAT (to private health care) to put access to care out of reach to more people. This contradiction seems to have gotten no attention from this government.”
The government tabled the anticipated VAT bill in the House of Assembly on Wednesday. VAT will be introduced at a rate of 7.5 per cent instead of the initially proposed 15 per cent, therefore across-the-board reductions in tariffs and duty rates will not accompany the tax’s implementation.
The bill includes a “pared down” list of VAT exempt services which does not include electricity or other utility services.
Acting on recommendations of New Zealand VAT experts, Minister of State for Finance Michael Halkitis explained that the government will not exempt electricity or bread basket items from VAT.
“We don’t expect (electricity) to go up by the amount of the VAT,” Mr Halkitis told reporters on Wednesday. “As it stands now it might increase a bit, it might stay the same; but definitely if it were exempted then BEC would not have the power to get VAT credits back, so we think bringing it into the net allows them to get their credits and reduce their cost. Our experts told us that being exempt is actually a disadvantage for a lot of services because they don’t have the opportunity to get credit back for VAT that they pay on.”
By not exempting bread basket items, the Christie administration is also heeding the advice of experts who believe that a VAT regime with few exemptions is crucial to its successful implementation, especially when the tax exists at a “low” rate like 7.5 per cent.
Additional concerns from the FNM include the short time-line for implementation, the uncertainty over social safety nets, and the absence of Freedom of Information (FOI) legislation, according to K Peter Turnquest, MP for East Grand Bahama.
Mr Turnquest questioned why the government has not heeded the advice of New Zealand consultants, who advised that the passing of a Freedom of Information Act and a Fiscal Responsibility Act were important in establishing trust over fiscal reform.
He pointed to the government’s significant outstanding revenue as evidence that revenue collection enhancements were still weak or nonexistent.
Mr Turnquest said: “If they are going to follow the New Zealand model, the first requirement is a FOI Act and an Anti-Corruption Act that includes whistleblower protection. We have not had a sound explanation of the process or the safety net that is supposed to ameliorate the negative effects on VAT.
He said: “With all of the indirect costs added to services which will be passed onto consumers through service cost increases or imbedded in product cost, the cost of living for every Bahamian is going to be increased exponentially.”
“We can all agree that fiscal reform, to include tax reform is necessary, but it seems we want to jump straight to seven before completing steps one through six. Nearly all countries that have successfully implemented VAT have taken 18 months to three years after introduction of the legislation. Here we are trying to rush the process for external reasons. We have to get this right and look at the long term objective and result.”
VAT will be introduced on January 1.
Comments
mostsickandtired 10 years, 3 months ago
I'm bothered by any discussion of VAT as if it is a viable option for Bahamians. What ever form it comes in, whether it is on BEC bills or not, etc., etc. it will devastate the Bahamian economy. Why are we having this discussion as if this is a rational option? We need to march down Rawson Square people! That is the only time they hear us. They think that the noise in the market is only a few disgruntled FNMS, they need to know its their grassroot support that is crying for immediate recall of this bill. The Bay Street Boys will have their watches and jewelry exempt so the FNM hierarchy will be happy, so its the poor PLP (and FNM and DNA) that will suffer, and the soon to be downgraded middleclass. We need to hit the streets, that is the only way. we talk about saving reefs, sharks, dogs etc. who is going to fight the cause of the poor Bahamian man/woman/child? The PLP have abandoned their core, who do they think will support them in the next election?
lionfish 10 years, 3 months ago
Let's organize this march. I will come.
sheeprunner12 10 years, 3 months ago
Marches will not work................ the power is in the purse/wallet .... BOYCOTT
eyeswideopen 10 years, 3 months ago
Finally, someone who's talking sense. Everything you have written I believe. I am continously saying that Bahamians need to wake the hell up. Stop accepting those few dollars given to them at election time and stop thinking and living in the moment. Think of the future, for ourselves and future generations!!!! This government needs to be put the hell out ASAP!!!!!!!
Bahamianpride 10 years, 3 months ago
Vat stinks but the question regarding BEC is not just the ridiculous addition of Vat but why are we paying 3-4 times more the amount for electricity than other nations in the year 2014. We know the answer but at the rate the government moves holding our breath for a solution will end in financial death. We know that except for the top elite, people cannot afford to pay, very few people I know are current, our problem goes deep and it is my conclusion that vat may just be the straw that breaks the camels back. The country does not need a protest its needs a revolution to clean up the mess created by years of systematic mismanagement and corruption. The truth is with or without Vat living in the Bahamas will remain difficult for the average non wealthy Bahamian without major changes to the way we conduct ourselves and do business.
Bahamianpride 10 years, 3 months ago
What's so interesting is to see politicians of both parties take shots but under neither leadership has the problems of BEC been resolve, yet we are to get our blood boiling over 7.5% when u robbing us 300 + percent. Stop robbing us period. We must vote better candidates inn..Tired of seeing the same people saying b.s. and doing the same.
sheeprunner12 10 years, 3 months ago
BOYCOTTTTTTTTTTTTT ............................... ITS TIME TO RISE UP AND THROW THOSE POLITICIANS OUT DA HOUSE AND ACROSS DA BAR
proudloudandfnm 10 years, 3 months ago
I hope the Bahamas understands. We are allowing amateurs to introduce a new tax. Not one of their deadlines has been met, not one. That is because they are amateurs.
We cannot allow amateurs to revamp our financials. We must stop this. It will be the single worst nightmare this country has ever had....
DO NOT REGISTER FOR VAT!
birdiestrachan 10 years, 3 months ago
Remember these are the same people who opposed independence and National Insurance. Cash knows the Bahamas is in deep debt. And the FNM is responsible for much of it. He knows the Country can not continue along this road. And he need not say collect the taxes owed. The FNM did not collect it during their 15 years , He knows better,But he does not care. he only wants to make brownie points The over run on the roads alone was 100 million dollars. Cash and his FNM Party should try to Practice some honesty.
concernedcitizen 10 years, 3 months ago
at least we got the roads ,when the PLP was doing it btw 2005 and 2007 w/ Bethels trucking the IDB yanked the loan ,,The 100 million over was all the water works things ,however say it dissapeared ,thats about 1/100 of our debt ,,At least we got the Airport ,Harbour ,port, roads ,hospital ,,What exactly are we getting for 30 million in the Bush in Andros or some 600 million pie in the sky nonsense at the dump ..I,m not always thrilled w HAI but he did more in 5 yrs then had been done in the last 30,,,in a recession he used our countries good credit to modernize and create jobs ,,There were 400 bahamians getting checks on the road works ,,and Birdie don,t pipe up bout about Hotmix ,who else could of supplied that much road tar ,,or you rather we pay a foreign firm to barge it in so some politicians can get a juicy US bank account
PKMShack 10 years, 3 months ago
@birdie you can not be serious trying to compare the two parties. Get your head out of the birds butt. Pointing fingers is an art of both parties but more so the yellow one. This is our Bahamas not the Bahamas of any party, support the Bahamas or suffer a lost at the polls. I am neither a PLP/FNM/DNA I vote what is best for me and my household. Let's go Bahamas we all know it's bad. Like the PLP said I to am ready to turn Bay Street into EYGPT. But hey we take anything and this the masses will take too.
birdiestrachan 10 years, 3 months ago
Go right ahead. What did Egypt accomplish? And how is Egypt doing now? How is the Government going to pay down the DEBT? and will turning Bays Street into Egypt. help? The truth is I am not looking forward to VAT. But what are the answers?
PKMShack 10 years, 3 months ago
@ birdie Egypt got rid of status quo Answers to VAT 1. Park those government cars=reduce government gas bill 2. Privatized all government ran offices, BEC,BAHAMASAIR,WATER WORKS 3. Cut out these new minister's just created 4. Collect property taxes 5. Stealing at customs 6. Cancel Carnival cost too much and the return is too little 7. Enforce traffic laws 8. Stop wasteful spending. Gov. sponsored books about nothing 9. Enforce National Ins Payments and prosecute the non compliance 10. Sell those BTC Shares to the public so we can empower our own pockets like they have been doing over the Years. I'm sure if I really think I could come up with more than just those 10 on the list. All of them if ran correctly brings in taxes for the peoples bank account. Don't take a master mind to fix.
kairosmatt 10 years, 3 months ago
Enforcing traffic laws is a win win: more money for debt reduction and less craziness on the streets! Will we ever see enforcement of any laws in this country??
kairosmatt 10 years, 3 months ago
PKMSnack just provided a strong starting list. You don't NEED VAT! It only hurts law abiding citizens who are already paying what they should be. Go after the ones that aren't paying and you have resolved the debt!!
ThisIsOurs 10 years, 3 months ago
With these inclusions its clear to me that these guys have absolutely no clue what they're doing. I'm saying that using "their" argument that the inclusions are better for the system. If it is better it seems like these should gave been the first items included. The epiphany six months before implementation is a terrible sign of exactly how much they do not know
in terms of health care a friend pointed out to me that the logic is totally warped. The public health care system is severely overburdened TODAY. what they should be doing is putting in incentives for people to use private health care but they're doing the exact opposite.
Honestman 10 years, 3 months ago
So the PLP is proposing to impose NHI on top of all this suffering? Empty rhetoric. The next three years is going to be painful for the average Bahamian. There is going to be a lot of anger once the impact of this new tax starts to be felt. The PLP's last desperate bid to cling to power will be to try and persuade the gullible that NHI is about to be implemented. Of course, it won't be but the party will dangle this in front of the illiterate as a carrot with the pledge that it will be implemented if they are re-elected. Thankfully, with the help of excellent journalists in both main newspapers this administration's ineptitude and corruption is being well and truly exposed. Thankfully even dyed in the wool yellow shirts are finally recognising that their blind loyalty has cost the country dearly. The PM needs to resign now but he and his party will cling desperately to power until the last minute of the last day. That's how they roll.
sheeprunner12 10 years, 3 months ago
Seriously???????? Can you name five FNM scandals in their 15 years that were remotely as bad as what has happened under this PLP government since 2012????? UR2.0, BAMSI, BEC, BTC2%, webshops, referendum2013, Housing, NIB/Cargill, Lloyd Smith, Abaco airport, Fred ambassadors, Oil deals, Dump deals, Carnival etc....................... You cant be serious!!!!!!!!!! Thats almost $2 billion in sweet deals or wastage.
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