‘15 percent VAT was not considered’

Former Prime Minister Dr Hubert Minnis.

As of Wednesday, December 1, 2021

By RASHAD ROLLE

Tribune Senior Reporter

rrolle@tribunemedia.net

FORMER Prime Minister Dr Hubert Minnis yesterday said his administration never considered increasing value added tax to 15 percent and in fact never saw the International Monetary Fund report which said such an increase might be necessary.

The Minnis administration commissioned the report, but, according to Dr Minnis, the IMF presented it in September as officials were preparing for the election.

Prime Minister Philip “Brave” Davis said when his party assumed office, it saw the analysis from the IMF which noted if the government failed to adjust its VAT structure, VAT would have to be raised to 15 percent.

Mr Davis said based on the report, it was his belief the Minnis administration was intent on raising VAT. Mr Davis was justifying his decision to put VAT back on breadbasket items during debate in the House of Assembly on Monday.

He said: “Now, I know you all remember that the member for Killarney (Dr Minnis) told the Bahamian people that he went to election eight months early because the country faced headwinds and tough decisions. We said at the time that he wanted Bahamians to vote before he raised their taxes, and this major tax increase appears to be what he had in mind.”

Many Free National Movement insiders and former administration officials insist the basis for Dr Minnis’ early election call was polling data that showed him with higher favourability ratings than Mr Davis. Nonetheless, the Killarney MP recently said he called an early election because difficult times were ahead for the country.

“When I spoke about headwinds,” Dr Minnis told The Tribune yesterday, “taxes were never a part of it. Just to give you some idea of what was a part of it, we know there is gonna be some serious increases in cost of living and we know there are other headwinds coming but taxes were never one. I am not an advocate for increasing taxes and that’s on record repeatedly.”

He added: “The FNM at no time agreed or contemplated increasing any VAT. Infact, during the last budget speech I committed to the Bahamian people that the government would pursue further tax reforms. These reforms were in order both to expand our tax base and to ensure that we create a tax system that is fairer and more equitable. We committed to that. During that time I committed to undertaking a tax study and then publishing the findings in a white paper for public consultation among key stakeholders and all citizens before the government made a decision on the way forward.

“We simply approached the IMF to assist us with the tax study and it’s now my understanding that they produced their preliminary report in early September around the time of the election. I, nor the Cabinet, never saw this report and I challenge this government to produce a white paper for consultation and to be honest, if the PLP had plans on increasing taxes, don’t try to hide behind the FNM. If you want to increase the taxes, tell the Bahamian people. You’ve already increased the taxes on bread basket items and you’ve already decreased taxes on champagne and caviar, so don’t hide behind us.”

The Davis administration plans to decrease VAT to 10 percent from 12 percent however VAT will also be reimposed on bread basket items, which were previously zero-rated under the Minnis administration.

TalRussell 3 years ago

As long as Mr. Minnis can get away with it then why not continue treating Pintard as the Interim Red Leader and everything else like showing no respect, and more so whilst Pintard plays his game of pretend sucks up to the House's "Some Piece of Cake," Madam Speaker.
So far, the UK Colony's post 2021 general election popoulaces, are far from bored, ― Yes?

birdiestrachan 3 years ago

I am not sure if Dr: Minnis really knows better it is him who increased VAT by 60% when he said he was against VAT,

He has to know that rich people buy breadbasket items also. or at least I hope he knows.

John 3 years ago

The REAL FACTS are that VAT was originally supposed to replace customs duties and stamp tax. VAT was supposed to be at 15% and customs duties and stamp tax totally done away with. But THE CHRISTIE government, after seeing how much additional revenue they raised, decided to keep both VAT and customs duties. Yes, in the short term, this was great for government. But it drove up the cost of living, especially for Bahamians and it stifled the economy in the long run. And it made customs clearance more complicated and more expensive because with just VAT it would have been 15% on everything across the board. Just Click and Clear. But there are still hundreds of tariffs and headings and customs brokerage is still an unnecessarily tedious job. And ALL governments subsequent to Christie continue to hold on to customs duties, not realizing how much it is stifling the economy. If the amount of duties government collects was allowed into the economy as consumption and investment and a there was only a single, simple 15% VAT, not only will government realize more revenue, but the cost of living in the country would decline by at least 20 percent and so would the misery level. Less people would require government assistance and employment levels will increase. And there would be no need for a significant increase in the minimum wage.

John 3 years ago

A lot of businesses fail because they don’t realize the REAL TAX BURDEN on a business. For example the way customs duties and VAT are calculated, a business (or individual can pay upwards of 50 percent In taxes at the border, even before their goods are allowed into the country. The freight and insurance are added to the cost of the goods, the the VAT is calculated on that figure. So if a business owner is operating under the assumption that he is only paying 12 percent vat he will soon find out as his ability to purchase new inventory will soon disappear. Then on top of that he has to pay business license and national insurance and probably property taxes in addition to vat on his utilities and supplies he purchase for the business. So government can easily get 60-70 percent taxes on the initial cost of goods a business purchases for resale. And so the consumer will ask ‘why do things in Nassau cost three times what they cost in Miami?’ And they will conclude, ‘Dese stores in Nassau ( The Bahamas) trying to make a killing.’ BUT NO! It’s your government trying to make a killing, stifling the economy with overtaxation and driving up the cost of living. Far beyond the reach of the average citizens.