The Tribune

EDITOR, The Tribune.

Perry Christie’s alter ego in the Ministry of Finance stepped completely out of character the other day and allowed himself to get caught up in the hype of the PLP convention.

Michael Halkitis is a naturally low-key man who doesn’t care much for hyperbole. But mesmerised by the pom-poms, the music and the sea of yellow shirted adoring fans, he went off the deep end in an attempt to explain the whereabouts of the elusive VAT money.

He gleefully let rip a laundry list of infrastructure and public goods that were facilitated by the $1 billion that was siphoned out our pockets as a “luxury” tax for the mere privilege of living here.

To quote the Joker in the popular Batman series, I would ask Mr Halkitis to riddle me this?

When VAT was introduced, it was on the promise of the reduction or elimination of certain types of customs duties. If that did happen and we caught a break on duties then what was the net income to the government from this new value added tax?

Supposedly we will have to subtract from this grand $1 billion total, those taxes that would have come to the government by other means such as customs duties. One billion dollars might have been the gross take but it could not be the net to the treasury.

I found it most puzzling that the Minister erroneously regaled his fellow delegates with tales about paying for new boats, new planes and even helping with hurricane repair with money from VAT takings.

He had to walk that back when it was pointed out that Parliament had approved loans to pay for many of these new items. Halkitis then embarrassed himself with the lame excuse that all government money goes into (and therefore comes out of) the Consolidated Fund. Well duh!!!

Then we got the doozy that VAT money somehow helped him to “facilitate” a loan to Bahamasair to buy new airplanes. As if a Sovereign guarantee wasn’t enough for the bankers. They needed a VAT comfort letter.

But leaving that out, VAT was introduced to help us reduce the fiscal deficit and to start paying down the national debt.

We are still running deficits and the debt has ballooned every year. Worse, we now have the indignity of a downgrade of our credit rating. Just now the clouds are building for an increase in the rate of VAT from 7.5% on everything except sunshine and rain, to a rate of 10% next year. And if Christie is re-elected he will be emboldened to take it all the way up to his original planned rate of 15%.

Assuming the economy doesn’t contract under this weight, that will double the amount of money that Halkitis can use to “facilitate” other loans. And don’t believe the smoke and mirror that will come about lowering customs duties further. Customs duty is a one-time pain, but paying VAT every time you withdraw your own money from an ATM is a perpetual annoyance.

If you think we will get better fiscal prudence from Kool PC and the Gang when we give them $2 billion in VAT receipts to play with, then I have some BAMSI insurance to sell you.

THE GRADUATE

Nassau,

February 9, 2017.