The Tribune

EDITOR, The Tribune.

It is the position of the Minister of State for Finance Michael Halkitis that valued added tax should be applied to gasoline. The transition to VAT has not been a seamless one.

The process has been somewhat gawky, as many Bahamians are still struggling to grasp the VAT system.

In fairness to the PLP administration, it was widely anticipated that there would be a few hiccups in the embryonic period.

This was evidenced by the apparent confusion over VAT and the law regulating fuel prices among members of the Bahamas Petroleum Retailers Association, as per The Nassau Guardian.

The average price for a gallon of gasoline in New Providence is, give or take, approximately $4. The government collected about $1.18 per gallon in gasoline taxes before VAT, while gasoline retailers collect just $0.44 and oil companies $0.33 respectively in profits per gallon.

Combined, the retailers and oil companies’ profit of $0.77 is $0.41 less than the government’s intake per gallon, before VAT. At approximately $4, it would then mean that the government would earn an additional $0.30 per gallon, based on the VAT rate of 7.5 percent.

So instead of collecting just $1.18 per gallon, the government will instead be collecting $1.48. The government does not import gasoline and other petroleum products. The government does not store it. And the government does not own service stations.

The oil companies and gas retailers do. Yet the government collects a substantial tax fee out of every gallon of gasoline imported into the country while the oil companies and gasoline retailers, who already have significant overhead costs, are allowed to make paltry profits. Adding a 7.5 per cent tax fee to gasoline prices may be deemed superfluous and excessive, in light of the hefty tax fee the government was already collecting before the advent of VAT.

KEVIN EVANS

Freeport,

Grand Bahama

January 6, 2015.