The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government has approved a 5 per cent increase in the Department of Social Services’ food assistance budget to mitigate the impact of Value-Added Tax (VAT), a Cabinet Minister said yesterday.

Social Services minister, Melanie Griffin, told Tribune Business that her Ministry would be monitoring other forms of assistance to make any necessary adjustments in the wake of VAT implementation.

“The Government has approved a 5 per cent increase in food assistance in order to offset any possible fallout from VAT,” she confirmed. “We have that in place, and while we do that with regards to food assistance initially, we will be monitoring other assistance and make whatever adjustments we need to make if it is needed.”

The Social Services minister added that as part of the first phase for a conditional cash transfer system, the Government has introduced a pre-paid Visa card in conjunction with Bank of the Bahamas (BOB).

The move, seen as a key reform to how the Government distributes aid to poor Bahamians, is designed to replace the food coupon system. 

Mrs Griffin said this was part of wide-ranging upgrades to the Bahamas’ social safety net, which is being financed with $7.5 million from the Inter-American Development Bank (IDB). 

Last June, the Department of Statistics said that since 2001, poverty levels in the Bahamas have risen by 3.5 per cent, while more than 40,000 people in the country live below the poverty line - defined as an annual income of less than $5,000 a year.

“We have the reform of our social safety net being implemented right now. That is where we will be introducing the conditional cash transfer,” Mrs Griffin said.

“As part of that process, we implemented the pre-paid Visa card as a pilot project in our Wulff Road centre. We are in the process of expanding that to our Fox Hill Centre. All of this is a part of the overall reform of our social safety system, which is the way we deliver service.

“All of this is the forerunner to the implementation of the conditional cash transfer, and the pre-paid Visa card is basically the first phase of it.”

FNM deputy leader, K. Peter Turnquest, recently criticised the Government for failing to announce or address plans for social services with the implementation of VAT.

Mrs Griffin said: “VAT came in on January 1. Persons would have received food assistance just prior to the holiday. They won’t be receiving it again until the end of January, unless there is some emergency and they come forward. That is when we will be able to say what the feedback is, what the impact may be at that particular time.”

 She added: “Our advice has been that the experience with VAT in other places is that there is usually a 3-5 per cent increase in food prices, so that is why we immediately moved to start with the higher 5 per cent.

“We have that approval and will move to put it in place to offset any fallout.”

A 2013 assessment by the IDB of VAT’s likely impact on the Bahamian economy and society noted that the  poorest Bahamians would face an 11.2 per cent spending/disposable income cut over 10 years as a result of Value-Added Tax (VAT) if no ‘social safety net’ is provided, with poverty levels increasing in line with the tax rate.

Mrs Griffin said: “At the Wulff Road Centre, our food assistance was just over  900 persons, but since we did the reassessment for the pre-paid card we have been able to determine that it’s somewhere around just over 600 persons.

“For the reassessment, the social worker has to see every one of those persons. The numbers at the Fox Hill centre start out 1,600 hundred. Once that reassessment has been done, if the experience is the same at the Wulff Road centre, we may see a reduction in that figure as well.

“Those reductions are due to the fact that some persons don’t really live in the area where they’re receiving the assistance from, so you would send their file to the area they are receiving assistance from. It could also be due to the fact that a person’s economic position has changed since they first started to receive the food assistance.”