The Tribune

By KHRISNA VIRGIL

Deputy Chief Reporter

kvirgil@tribunemedia.net

Free National Movement Chairman Sidney Collie yesterday urged the government to tell the truth regarding the nearly $1bn in value added tax revenue it collected from taxpayers since the tax was imposed on Bahamians.

Mr Collie was responding to State Finance Minister Michael Halkitis’ explanation of how the government has used the VAT collections at the Progressive Liberal Party’s opening night of convention on Tuesday.

The Democratic National Alliance and Marco City MP Greg Moss also took issue with Mr Halkitis’ utterances on the matter.

The government rolled out the tax in January 2015 at a rate of 7.5 per cent on most goods and services. In November, Mr Halkitis said more than $850m in VAT had been collected.

“The PLP wants to continue to tout that by implementing VAT they have helped cut our deficit, but now they claim that they spent it on projects,” Mr Collie said in a press statement. “What is the truth? What did they spend the money on? The people still want to know where their money went.”

“Economy failing, ease of doing business at record lows, downgrade of our credit rating to junk status, our country’s deficit continuing to increase – yet the PLP wants to tout their work to implement the onerous VAT tax.

“They must truly be delusional to think the Bahamian people believe any of their empty rhetoric. They told us that by implementing VAT they would be able to reduce the deficit, but once again that has been another broken promise of this PLP government.”

Mr Halkitis has previously said collected VAT money goes into the consolidated fund, allowing the government to pay its expenses.

However, on Tuesday night, the state minister took a different tone, claiming the substantial collection went to fund various initiatives and defended VAT’s implementation.

However, many of the projects Mr Halkitis mentioned were initiatives that the government borrowed money to pay for.

He punctuated his speech with the repeated phrase “That’s where the VAT money gone,” prompting the enthusiastic crowd to chant the phrase.

At the time he said: “It is a known fact that the Bahamas government relied too heavily on customs duties and stamp tax as its principal revenue source, a tax regime that failed to capture the service component of the economy; about two-thirds of the Bahamian economy is built on service.

“Value added tax captured that economic activity that went untaxed for many years. Continued inaction was not an option.”

Mr Halkitis also said: “As a result of our reform programme and despite a stubbornly difficult global environment, we have been able to get our finances on a good footing while at the same time doubling the investment in scholarships from $7.73m to $16.3m. This empowers young Bahamians. That’s where the VAT money gone.

“(We) provided the financial resources to transition from the College of the Bahamas to The University of Bahamas at well over $12m. That’s where the VAT money gone.

“We are building new schools and have invested tens of millions of dollars in repairs and upgrades of existing schools, thus empowering our young people. That’s where the VAT money gone.

“(We) provided the money in excess of $150m to introduce comprehensive National Health Insurance in short order for all our people, but especially those in most need and who cannot afford private insurance. This empowers our people. That’s where the VAT money gone.

“In preparation for NHI, we spent tens of millions of dollars on a new Critical Care Block, a new hospital in Exuma, upgrades to health clinics and at PMH in addition to new ambulance fleet. That’s where the VAT money gone.

“(We) facilitated a new fleet of aircraft for Bahamasair at a cost of $100m. A modern, safe and efficient fleet reduces state subsidies and improves public safety. This builds a modern Bahamas. That’s where the VAT money gone.”

Mr Halkitis also said tens of millions of dollars were spent on roads, docks and seawalls in Andros, Exuma, Mayaguana, Abaco, Grand Bahama, Cat Island, adding that the government invested in a new fleet for the Royal Bahamas Defence Force at a cost of some $232m to protect our borders and marine resources.

Democratic National Alliance (DNA) Leader Branville McCartney said in a press statement yesterday that Mr Halkitis’ comments were “troubling”.

“Nothing is more amazing than the junior minister for finance, Michael Halkitis, sharing with us what he did with our value added tax revenue and the government revenue overall,” the statement said.

“Yes, he kept a straight face through it all and was very, very serious in his dissertation. This is why we are troubled by the presentation centred on those remarks. News flash to the PLP: The Democratic National Alliance, and by extension the people of the Bahamas, we know some of the things you spent the VAT money on. We know you messed it up with your pet projects and wasteful spending for things that went 100xs over budget. That much we know.

“We also wanted to know where is the Central Revenue Agency and the legislation you were supposed to bring to Parliament to create that agency, in the attempt to move collection of public money’s out of the ineffective system you said VAT was supposed to counteract by putting in place a new oversight body? Under a DNA government you will have greater oversight and a separation of the Ministry of Finance’s Revenue and Expenditure arms, to keep it under the power of two persons: The minister for finance and the financial secretary by extension, is a recipe for waste, corruption, theft and bad practices,” Mr McCartney added.

Meanwhile, Mr Moss accused the government of spending VAT money with their cronies.

He said: “I hear this same type of approach when I hear the prime minister saying that he will now take seriously the idea of mortgage relief. The bottom line is we’ve had five years, five years for the people to see performance that would advance the interests of this country.

“And during that time, what we’ve had with the VAT money, we’ve had a promise that the VAT money would be used to repay the national debt and it has not been done, I’ve stood in Parliament and showed the people where the VAT money went frankly in the first year, when the government refused to fund the Ministry of Health on the assumption that it would get money through NHI, it went to the people and said ‘oh we’ve had a savings’ when it had no savings, it just didn’t fund the MOH. And it’s projections were increased from money coming in from NHI never happened.”

“So the government had in that budget of two years ago, a $500m hole, which they filled with the proceeds from VAT. More than just that though, what we have is a government that’s out of control on spending, what we have is a government that is unresponsive to the call for transparency. What we have is a corrupt government, and I’ve said before in the House and I’ll say it again: If we are to fix this country we must start by dealing with the question of corruption in this country,” Mr Moss said.