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PM: Not a dollar of VAT wasted

Prime Minister Perry Christie.

Prime Minister Perry Christie.

As of Thursday, March 30, 2017

By KHRISNA VIRGIL

Deputy Chief Reporter

kvirgil@tribunemedia.net

AMID lingering questions regarding Value-Added Tax (VAT) collections, Prime Minister Perry Christie was on the defensive yesterday as he explained how his administration handled $1.14bn in VAT revenue accumulated during 2015 and 2016, insisting that not one dollar of the money has been “frittered away” or spent “surreptitiously”.

Finally giving an extensive explanation of VAT revenue since the matter was reignited following the Progressive Liberal Party’s (PLP) convention in January, the Prime Minister told parliamentarians it was a “worrisome” and nonsensical misconception that his administration mishandled VAT money. This issue, he said, needed to be put to rest once and for all.

VAT was implemented on January 1, 2015, at a rate of 7.5 per cent on most goods and services.

According to Mr Christie, while VAT collections are automatically sent to the Consolidated Fund, where revenue is “indistinguishable” and not earmarked for any one purpose, it goes toward three categories of reduction.

These include tax reduction, funding of expenditure and deficit and debt reductions being the residual outcome. He was adamant that the government had been “crystal clear” from the onset that the administration’s programme for tax reform had manifold objectives.

While VAT did yield more than $1.1bn, Mr Christie said there was a vast impact on recurrent government revenue due to the elimination of the hotel occupancy tax, VAT refunds and other tax reductions. These amounted to a total reduction of $344m in revenue foregone since the introduction of VAT, but the net impact on revenues to the government was $756m.

He told the House that in summary, 40 per of the VAT revenue went towards reducing the deficit, 30 per cent replaced revenue foregone from tax reductions and the remaining 30 per cent went towards general expenditures.

To further support transparency, the Prime Minister also announced the launch of a new website - understandingVAT.org - intended as a new resource for Bahamians to better understand how VAT was spent.

“As I mentioned earlier, some $1.14bn was collected in respect of VAT in 2015 and 2016. Of this total, the Department of Inland Revenue collected $726m: $316m in 2015 and $410m in 2016. The department also refunded some $20m in VAT over these two years. The Department of Customs collected $415m over the two-year period: $209m in 2015 and $207m in 2016.”

He also said: “Every single dollar of revenue is fully accounted for each and every year and is subject to audit by the independent Auditor General. As such, not one dollar of VAT revenues collected over the past two years has been frittered away or spent surreptitiously. That is a grave and nonsensical misconception that, once and for all, must be put to rest.

“This communication has also reiterated the various objectives of revenue enhancement through VAT implementation, and has highlighted, with supporting data, the extent to which new VAT revenues have: first, facilitated additional government spending in priority areas and in response to adverse economic and natural events; second, accommodated reductions in other major taxes for consumers, business and property owners; and third, directly contributed to significant reductions in the GFS deficit over the past three years.

“Put further in layman’s terms, if I reduce the amount by which my expenditure exceeds by revenue, the less money I borrow. This is a slowing of debt accumulation. As my revenues start to exceed my expenses, which are projected to take place fiscal year 2018/2019, there would be an actual reduction in debt. However, to be clear, every year an element of expenditure is the servicing repayment of government debt and therefor if the government has been able to repay debt without having to borrow as much, we are on the right fiscal trajectory.

“I have made it clear today that we believe it is the government’s responsibility to explain as clearly as possible how the revenues that come into our government are utilised. This communication is one way of reaching out to citizens,” Mr Christie continued.

“Our nation has faced and continues to face important economic and social challenges. Through its Charter for Governance pursued during its current mandate, my government has demonstrated that it has the vision for the future and the action plans needed to improve the quality of life for all Bahamians. A great deal of fundamental and needed change has been initiated and implemented over the past five years. The government is steadfastly dedicated to further pursuing and completing its change agenda in the period ahead.”

Money lost

Mr Christie gave a breakdown of the revenues that were lost due to tax reductions.

“With the implementation of VAT in January, 2015, and with the fiscal year 2015/2016 budget implemented in July of 2015, the government began the process of paying back to Bahamians some portion of the dividends from our successful VAT regime, thereby providing much-needed tax relief.”

According to Mr Christie, among the measures announced were: a change in the calculation of customs duty, from a CIF (cost insurance freight) to a FOB (free on board) basis; the outright elimination of import duties on several items; duty reductions on several other items; the maximum duty on motor vehicles was reduced from 85 per cent to 65 per cent; duty exemptions under the Family Island Development Encouragement Act were extended for another year in Abaco, and the east and west sections of Grand Bahama, Eleuthera and Bimini were added to the list of qualifying areas.

He also said that duty concessions under the City of Nassau Revitalisation Act were extended for another year; there was a reduction in the top property tax rates on owner-occupied residential properties, from 0.75 per cent to 0.625 per cent; more pronounced property tax relief for pensioners in mid-value properties; a 10 per cent discount for persons who pay property tax early each year; a moratorium of six months for the waiver of real property tax surcharges on residential properties for persons who pay tax in full or make arrangement to do so and a harmonisation of commercial property tax rates at a lower level of 0.75

per cent and a reduction in the maximum rate of Business License fees, from 1.75 per cent to 1.5 per cent, plus a reduction in rates to 0.75 per cent for agricultural and fisheries operated businesses, food, meat and fruit processing and independent fuel distributors in the Family Islands.

Stamp duty on real estate transactions was lowered to 2.5 per cent, with VAT applying only to properties above $100,000.

Mr Christie said in the 2016/17 budget, the government’s efforts to provide additional tax relief for consumers, businesses and property owners continued with an elimination and reduction of import and excise duties on a number of consumer goods and building materials; expansion of tariff concessions for light manufacturing; extension of duty exemptions under the Family Island Development Encouragement Act and the City of Nassau Revitalisation Act for another year; and real property tax concessions granted to residential properties were extended to commercial properties among other things.

These cut backs resulted in a loss of $134.9m between 2015 and 2016 in customs and excise duties and considerable losses in various real property tax fees.

Additional funding

Mr Christie said over the past two years, the government was placed in the position to provide additional funding for some important social and public programmes.

These, he said, were in national security, health, education and social services.

“Since the implementation of VAT, the government has hired an additional 99 police officers at $1,782,000 per annum - during the fiscal year 2015/2016; it has hired an additional 166 Defence Force officers at $2,988,000 per annum - during the fiscal years 2015/2016 and 2016/2017; it has employed 347 more teachers and education support staff at $8,400,500 per annum - during the fiscal years 2015/2016 and 2016/2017; and it has hired 103 additional doctors and health professionals at $2,932,550 per annum during fiscal years 2015/2016 and 2016/2017.

“These vital expenditures would not be possible without VAT revenue. Nor would it be possible to service the debt associated with the acquisition of the vessels from the RBDF, at $25m a year, or purchase a new immigration, border control and passport system at a combined cost of $33m, of which $5.8m was paid in this fiscal year.

“Nor would it have been possible to purchase a new Road Traffic system at $8.3m, of which $1.9m has been paid off this fiscal year, and four new Doppler radars at $23m of which $7 million would be discharged this fiscal year,” Mr Christie said.

Comments

Sickened 7 years, 7 months ago

Sorry Perry but the numbers still don't add up to a figure that's even close to $700 million in more than expected revenue. And... that's not even counting the additional borrowing during the period. Can we please hire some experience accountants and not book-keepers?

Economist 7 years, 7 months ago

Then why not set out what you have done with the money?

If you know that, there must be records that you have referred to in order to make such a statement.

Show us!

themessenger 7 years, 7 months ago

Better yet, show us your offshore bank account statements.

sealice 7 years, 7 months ago

Can someone please tell Perry that not everyone was deprived of the privilege of an education like all the people in his constituency have been for the past 40 years?? And that when we see it and smell it we know it's BS!!!

Honestman 7 years, 7 months ago

From Christie's perspective, of course it wasn't wasted. PLP family and friends did very well, thank you.

Well_mudda_take_sic 7 years, 7 months ago

At the time they introduced VAT, Christie and Halkitis assured us that these tax dollars would be applied (earmarked) solely for the purpose of reducing the then existing levels of our annual deficit and national debt. Now Christie and Halkitis readily admit that they outrightly lied to the Bahamian people. They foolishly tell us we should be happy VAT was introduced otherwise our ballooning annual deficits and national debt would be even higher than the current exorbitant and unsustainable levels. They also have no shame in telling us they have even used our VAT dollars to grow the government. It's clear Christie and Halkitis think we are all fools! We all know that millions and millions of our tax dollars have been flushed down the proverbial toilet as a result of waste, fraud, corruption and outright instances of theft that have occurred under the watchful eyes of both Christie and Halkitis. These despots know no shame!

banker 7 years, 7 months ago

Not a single person looks happy in the photograph.

Well_mudda_take_sic 7 years, 7 months ago

They rightfully fear what they know would happen to our country if dingbat greedy Minnis should ever become PM.

DDK 7 years, 7 months ago

I thought that the last time they displayed it! They got worriation!

Cobalt 7 years, 7 months ago

Everytime Perry Christie opens his mouth he initiates another vote for the FNM.

If he keeps talking, Hubert Minnis won't even have to campaign. This man continuously insults the intelligence of right-thinking Bahamian citizens by talking utter rubbuish.

Mr Christie.......... if it's one thing that we the Bahamian public DO know is that our tax dollars have been misappropriated and mismanaged.

You and your government have yet to provide the Bahamian public with the proper financial reports and transcripts of how our tax dollars have been used. There is supposed to be a nonpartisan committee delegated to evaluating and observing how the government spends money. This committee is then obligated to report their findings each year. That how all first world nations operate! In the U.S. the use of tax dollars are transperant not only to the government but the citizens as well. But here in the Bahamas you and your government can just spend money without any accountability or transparency then demand that your citizens simply take your word for it! Only donkeys listen to nonsense!

For God's sake.... just hurry up and call elections please. We're tired of listening to your foolishness.

DDK 7 years, 7 months ago

Why wait until so late in the day (just prior to General Election) to come up with these figures (accurate or otherwise)?

Itellya 7 years, 7 months ago

Photo caption

" Boy I hope this works"....

ThisIsOurs 7 years, 7 months ago

I think he meant, "not a dollar of VAT wasn't spent"

happyfly 7 years, 7 months ago

40% went to reducing the deficit ? Does that mean 40% of the VAT income is money they did not spend ?? So they should have spent a couple hundred million more but they didn't because they spent it........

Well_mudda_take_sic 7 years, 7 months ago

PERRY CHRISTIE STOOD ON THE FLOOR OF THE HOUSE OF ASSEMBLY (HOA) AND TOLD AN OUTRIGHT BOLD FACED LIE BY HIS OWN ADMISSION. He readly admitted on the floor of the HOA that our VAT dollars are being commingled with other sources of government revenues paid into the Consolidated Fund of The Public Treasury. Christie and Halkitis know full well that money is fungible by definition and therefore loses its identity when mixed with other money unless it is separated and/or accounted for as a segregated fund. Neither a separate bank account nor a segregated fund account within the general ledger of the Consolidated Fund was ever established for the purpose of tracking how our VAT dollars are being used by the government. It is therefore impossible for Christie and Halkitis to tell us how our VAT dollars have been spent by the government. They therefore can pick any government expenditures of their own choosing and say this is what your VAT dollars were used for.

At the time they introduced VAT, Christie and Halkitis assured us that our VAT dollars would be applied (earmarked) solely for the purpose of reducing the then existing levels of our annual deficit and national debt. I knew they were lying from day one because the VAT legislation did not require a separate bank account and/or segregated fund within the Condolidated Fund to track how the VAT dollars would be spent. Naive proponents of the introduction of VAT who were only too anxious at the time to kiss Christie's butt, like John Rolle, Gowan Bowe and Ishmail Lightbourne (the infamous tax dodger), foolishly trusted the government to account for our VAT dollars in anyway the government saw fit. These dimwitted proponents of VAT simply ignored the fact that our government would obviously choose the most non-transparent way possible of recording our VAT dollars so they could then spend them in any way and on anything they would like.

realfreethinker 7 years, 7 months ago

He would have been better not making that report. He did the plp no favors here. There is an old saying " It's better to keep your mouth shut and be thought a fool than to open it and remove all doubt"

TalRussell 7 years, 7 months ago

http://tribune242.com/users/photos/2017…

Maynergy 7 years, 7 months ago

" No other race on earth i.e the Bahamian people who has had to endure what we have and yet we still continue to try to be good citizens and live good lives as best as we can for despite all that is done against us they can never break our spirit for our greatness through time is our strength and valor out for all to see." H. E Ammadou " Aucune autre race sur la terre, c'est-à-dire le peuple des Bahamas qui a dû endurer ce que nous avons et pourtant nous continuons à essayer d'être de bons citoyens et de vivre une vie meilleure tout ce que nous pouvons, malgré tout ce qui est fait contre nous, Esprit pour notre grandeur dans le temps est notre force et la valeur hors de tous à voir."

H. E Ammadou

cmiller 7 years, 7 months ago

I don't think that anything he says will make much sense to Bahamians. The real problem is that they promised us this money would go towards would reduce our national debt. Still, after raping the nation of over a billion dollars ( at least I feel it was rape), they are telling us that we misunderstood what they said and that they have actually spent all the money. We are now at junk bond status AFTER they collect over a billion dollars!!!! That's why people are so angry right now.

TalRussell 7 years, 7 months ago

Comrade Cmiller, the former law partner of this PM, promised us that the $220 million from sale of BTC, would go towards building a new$500 million Princess Margaret Hospital? They still examining how that $220 million was spent and PMH is still an an shack of a hospital. You go figure, hey?

cmiller 7 years, 7 months ago

Yeah, I went and I figured. ALL these hoodlums are thieves and we need another commission of inquiry, is what I figured TalRussell

Sickened 7 years, 7 months ago

You are right. One day hopefully, we will elect a majority of honest, sensible politicians to sit in the honorable house and run our country properly. Hopefully we get there this go around. What say you?

Maynergy 7 years, 7 months ago

" You've also just come from having perhaps the best Prime Minister ever i.e (Hubert Ingraham) - certainly, one of the best - to having someone who appears determined to give away much of our Sovereign land over to .the highest bidders and speculators ever. Supported by the PLP - which despite all of its howling about history, is showing its true colors as a thin-skinned, xenophobic, no doctrine of compromise and not a progressive presence in the landscape." H. E Ammadou Ammadou Xibson 2017

John 7 years, 7 months ago

Basically wat Perry Chrisite is saying is that dey put the VAT money in the public purse with the rest a we money dem. And so when dey open the bag to take out the VAT money it bounce out with some of da otta money wat was in dere.and dey couldn't a find it no more. And den dey add some a da VAt money to the national debt and increase dat by two billion dollars. But any way dey ger keep looking fer a gooder excuse to xplain ha yinna vat money dem get spent. Cause ainn nobody t'ief nottin.

realfreethinker 7 years, 7 months ago

I guess it is hard to waste monies that have been stolen.

mckenziecpa 7 years, 7 months ago

The government is claiming the VAT monies were put into a consolidated fund, if this is in fact the case a good auditor/forensic or general auditor can still back track the monies. Based on tracing methods, if monies are deposited from various sources into one bank account, could a skilled auditor not easily identify each source and what’s left over can be argued to be the unidentified funds. The government would not subject themselves to an independent (Truly) audit, yes, much respect to the auditor general, but I have yet to see an overall or comprehensive report on the treasury tranches of monies into government subsidies and off balance sheet vehicles. just my 2 cents

SP 7 years, 7 months ago

Hey Jackass, You Led The Country Thru More Downgrades Than Any Leader In History

Nothing else to discuss. Your a failure by any definition of the word, Now STFU, get the FOOK out and be gone before you do more damage to our country and people!!

Sickened 7 years, 7 months ago

Simple and concise summation!

proudloudandfnm 7 years, 7 months ago

In a perfect world Perry and his entire cabinet would start their prison sentences in about a year or so.....

But alas. This is the Bahamas. They'll all retire as heroes....

Reality_Check 7 years, 7 months ago

This lot will not be so fortunate.

Pastor_Cedric_Moss 7 years, 7 months ago

Well, strictly speaking, the PM is right: He and his government did not waste a dollar of VAT; they wasted hundreds of millions of dollars of VAT, and are poised to waste more on things like public debauchery, called carnival.

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