The Tribune

By KHRISNA VIRGIL

Deputy Chief Reporter

kvirgil@tribunemedia.net

AMID calls for government transparency over value added tax (VAT) collections, a war of words erupted in the House of Assembly yesterday between government MPs and opposition forces that have rejected the Christie administration’s attempts to justify how the tax revenue has been expended.

The heated shouting match prompted Prime Minister Perry Christie to reveal to parliamentarians that he directed State Finance Minister Michael Halkitis to prepare a full explanation to address the nation’s lingering VAT concerns.

The completed explanation, Mr Christie said, will be publicised in every “nook and cranny” of the country. However, the prime minister did not say when the report will be finished or presented.

Mr Christie went on to explain that when the government reduced customs duty rates, 40 per cent of VAT revenue was earmarked to compensate for the duty reduction, adding that 30 per cent would go to national debt reduction.

Prior to Mr Christie’s attempt to justify his administration’s handling of VAT funds, Official Opposition MP Dr Andre Rollins and Free National Movement Deputy Leader Peter Turnquest took the government to task on the issue.

Mr Turnquest argued that Bahamians have a right to ask questions regarding VAT, while Dr Rollins questioned whether the government had erred in its tax collection projections and pinpointed the national debt increase by $2bn.

The argument also saw the government and opposition sides accuse the other of “intellectual dishonesty”.

The national debate regarding VAT was reignited last week after Mr Halkitis delivered a fiery speech during the PLP’s national convention about how the tax revenue was spent. While the speech was well received by party supporters at the event, it fueled more questions regarding VAT.

The argument in the House unfolded as debate began on the Freedom of Information Bill (FOI).

As he wrapped up his communication on the FOI Bill, Education Minister Jerome Fitzgerald said in the name of transparency and accountability he had concerns about the misinformation on VAT circulating in the country.

“Mr Speaker, I want to make a few points this morning,” he said. “The first point is that last year June we had a debate in this place where we laid out the VAT and government revenue and expenditure.

“The summary of revenue is as follows, Mr Speaker: VAT represents 25 per cent of government revenue – $652m, 25 per cent Mr Speaker, import tax 13 per cent, excise - 11 per cent, property tax six per cent, other fees and services - 11 per cent. Twenty-five per cent of our government revenue comes from VAT. This ain’t no rocket science, it is laid out in the budget debate,” Mr Fitzgerald said.

“So 25 cents out of every thing the government spends on comes from VAT. Twenty cents out of every dollar the government spends comes from VAT.

“I mean what’s so hard about that? A grade one student could understand that. All the teachers, all the persons who are employed by government, all the roads, all the clinics, Bahamasair, Mr Speaker we subsidise. Bahamasair that comes from VAT money, Water and Sewerage we subsidise, Mr Speaker. The scholarships that I have been able to double, (I have) been able to do that from VAT money. Twenty-five cents out of every dollar, Mr Speaker, the defence force boats…”

As the Marathon MP continued, a seated opposition MP shouted: “Loans, loans, loans, loans, loans!”

Mr Fitzgerald continued: “But who pays the loans? Twenty-five cents out of every dollar comes from VAT money. And, Mr Speaker, what gets me is that there are people who know better. The member for East Grand Bahama (Mr Turnquest) knows better, those who’ve been around, Mr Speaker, know better.

“The government has one pot that the money goes into and one pot where we spend it. What’s so difficult about that ,Mr Speaker?

“Nobody asked where the excise money gone. Nobody asked where the duty money gone. Nobody asked where the company fees gone, (or) the tourism tax, the gaming tax, the motor tax, the property tax, the bank and trust company fees,” Mr Fitzgerald said. “Nobody asked where that gone, so why you want to know where the 25 per cent gone and where the other 75 per cent gone to do. Everything the government touched it spends money on.”

Standing on a point of order, Mr Turnquest moved to clarify that the opposition did not vote in favour of VAT as was suggested by Mr Fitzgerald.

He argued that ahead of the government’s implementation of VAT, Bahamians were told that VAT revenue would be used to pay down the national debt. However, he said, in recent days, Bahamians have learned that the collections went toward other purposes.

“I want to correct the minister,” Mr Turnquest said. “In his last statement he suggested (or) he outright said that the opposition voted for value added tax. The record would reflect, Mr Speaker that the opposition did not vote for value added tax.

“Further Mr Speaker, the member mentioned about all these other things that value added tax paid for. Mr Speaker, the record will reflect that we borrowed $232m for boats,” Mr Turnquest added.

“You can’t stand here in this House and say that value added tax paid for boats. You can’t say that Mr Speaker. You cannot say that VAT paid for these things that the Bahamian people know we borrowed money for and that we are paying the price for today.”

However, Mr Fitzgerald in response insisted that he did not intimate that the opposition voted in favour of VAT’s implementation. He added that he had not berated Bahamians.

And as Mr Turnquest stood to interject, Mr Fitzgerald shouted: “I sat down ’til you finished, so you sit down ’til I’m finished.”

“Mr Speaker, I know why they are vex you know, because Minister Halkitis said that’s where the VAT money gone. I don’t know why he would apologise for that. It’s simple, Mr Speaker, 25 cents out of every dollar collected is from VAT money. I’m going to say it 100 times until you get it inside your head,” he said.

For his part, Dr Rollins raised questions regarding the government’s revenue projections.

He said: “The fact is that the public would know that since the government has come to office there has been an increase in the national debt to the tune of some $2bn. We also know that in excess of $1.3bn worth of VAT collections has been received by the Public Treasury. We were told initially that VAT would be used to pay down on the debt. How is it that $1.3bn in VAT could be collected, yet the debt has increased by some $2b?

“Furthermore the litany of payouts that the minister of state for finance, who I’m quite surprised has been silent thus far in defending what he has said, he went through a recitation of things that supposedly VAT has been used to pay for when we all know that those things he indicated were paid for via loans by this very same House. Furthermore Mr Speaker, the minister for education whose portfolio does not cover matters of finance as far as we are aware has said that 25 per cent out of every dollar collected is coming from VAT.

“The reality is if his numbers are correct that means that the treasury is collected at least $2.4bn a year, which means that we should be operating a surplus and not a deficit, which means then that the budget that we came here to debate which says that they expect to collect $1.9bn is off by some $500m which is poor math.”

In his defence, Mr Halkitis said he planned to speak on VAT which he is to present in an upcoming session. He said while his convention speech has sparked national debate, he stood by every word made to PLP supporters last week.