The Tribune

By AVA TURNQUEST

Tribune Staff Reporter

aturnquest@tribunemedia.net

PORT OF SPAIN, Trinidad - A regional economist said Value Added Tax (VAT) is “the best alternative to border taxes” for this country adding that The Bahamas must move quickly to create vital alternative sources of funding as customs duties face “significant” cuts in the lead up to WTO ascension.

Carl Howell, economist at Caribbean Development Bank (CDB), expressed confidence that the Christie-led administration would implement VAT as the best alternative to support its eroded revenue base.

Mr Howell revealed that the bank is currently working on a number of projects in the country as part of a lender engagement strategy implemented last year.

He spoke to The Tribune on the sidelines of CIBC First Caribbean’s regional infrastructure conference under the theme “Driving Caribbean Infrastructure Forward”.

The CDB is currently engaged with the College of the Bahamas to support the institution’s expansion with curriculum development and enhanced education services, according to Mr Howell.

In the pipeline, he said, are projects to target the high poverty levels, and infrastructure development gaps in the Family Islands.

Mr Howell said: “(VAT) will come on stream, because of where The Bahamas is (economically). We did a country strategy for The Bahamas last year, and recognising that in the country you rely heavily on border taxes, you don’t have income taxes.

“So because of the fact that you’re seeking to have WTO ascension, your border taxes will come down significantly and it erodes your revenue base,” he said, “The Bahamas has to look very quickly at alternative sources of funding.

“VAT is seen as a relatively good option. I think The Bahamas is one of the few countries in the region without a VAT, it’s unpopular because it represents a culture change for The Bahamas but it’s required, it’s necessary.”

Mr Howell added: “It is the best alternative to border taxes.”

In April, Turks and Caicos government minister Akierra Missick said the British territory rejected VAT proposals because of its projected impact on the cost of living.

Ms Missick, minister of education, youth, sport and culture, told The Tribune the tax was not the best way forward given the country’s model as a consumer-based society – a characterisation she said that was similar to The Bahamas.

Yesterday, Mr Howell said he did not support that argument.

“No, as long as you’ve got services in the economy, because VAT taxation is not only goods but also services. So I wouldn’t support that argument.

Mr Howell said: “VAT really is seeking to shore up the revenue base in the country. It’s fundamentally important, The Bahamas in the past was one of our star performers in the bank, you had debt levels that were relatively low.”

He added: “It is not bad now but the debt levels are high and they’re inching up gradually because as the economy hasn’t performed strongly over the past few years you had to spend to maintain infrastructure.”