By LEANDRA ROLLE
Tribune Staff Reporter
lrolle@tribunemedia.net
ECONOMIC Affairs Minister Michael Halkitis maintained on Friday that removing value added tax on breadbasket items is not feasible at this time, noting the tax regime was a necessary initiative meant to reduce government borrowing and improve the nation’s overall “fiscal health.”
Mr Halkitis was responding to increased calls for the government to eliminate VAT on breadbasket items, which had been zero-rated under the former Minnis administration.
Since the tax was implemented in January, the government has frequently come under attack from the opposition, which has sought to portray the Davis administration as insensitive and heartless in view of the move.
Some in the business community have also backed calls for the removal of VAT on the food items, including Super Value’s President Rupert Roberts.
Asked to respond to those calls, Mr Halkitis maintained that the government did not intended to change its position on the policy, which he said followed best world practices and expert advice.
“It’s not feasible,” Senator Halkitis said during a press briefing at the Office of the Prime Minister Friday.
“When we first introduced it at seven and a half percent, our advice after considerable deliberations and discussions and back and forth with the private sector, with academia, with scientists and scholars - the best policy is to have a low rate with minimal exemptions which is what we did and it was very effective and lauded around the world as being effective.”
“When the FNM administration came in in 2018 and they made a promise that they would take it off the bread basket items which they did, but at the same time that they took it off the bread basket items, in order to be able to do that, they raised the rate from 7.5 percent to 12 percent and so I hear this call coming mostly from the political corners about doing this because okay, it’s a good political point to make, but to recognise that when you begin to introduce exemptions, the only way you can do it is if you pay the higher rate on everything else.
"So, we have studied this and we’ve gone back and forth and our best advice is a lower rate that’s the 10 percent, lower than the twelve, but with minimal exemptions because it’s more efficient and again, it’s not something that we did haphazardly," he also said.
Mr Halkitis said while the government is sympathetic to the plight of vulnerable Bahamians, it also cannot ignore the nation’s precarious fiscal situation, pointing to the country’s ballooning debt among other things.
He said: “We would love for the government to be able to say that we’re taking the tax off this, we’re taking the tax off of gas but if we do that, we have to get money from somewhere else and that’s just the way it is. Our debt has gone up by $2b in the last two years. If we don’t earn it through taxes and revenue, we have to borrow it. I hate to be the one who has to keep saying this because I’m sure nobody wants to hear it but it’s just the reality that government’s fiscal health is very important because it impacts all of us and so we are hopeful the situation normalises."
In January, VAT was reduced from 12 percent to 10 percent across the board with few exemptions, but also reintroduced on breadbasket items.
Education Minister Glenys Hanna Martin on Thursday told parliamentarians that she struggled with the Davis administration’s decision to return value added tax to breadbasket items.
Meanwhile as it relates to the country's economic recovery, Mr Halkitis said there have been positive signs.
"We are trending ahead in terms of revenue and in terms of expenditure, we're slightly down from our target, three per cent down and in terms of the deficit, it's currently showing just under $345m for the first nine months and we had forecasted $850m for the entire year.
"So, we're ahead of schedule because mostly the revenues are performing very well and we so far have been able to keep a fairly good range on expenditure," he said.
He also said the World Bank has predicted the economy will grow by eight percent, an increase from the initial six percent forecast.
Comments
tribanon 2 years, 7 months ago
This most cruel and heartless Davis led PLP administration would rather have thousands of poor and suffering Bahamians go without food to eat than do away with all taxes on food and gasoline for at least the next 12 months.
And we never hear the very insensitive and privileged political ruling class seriously talk about 'belt-tightening' measures aimed at reducing the many many millions of dollars of unnecessary and most wasteful government expenditures. They could and should at least start with the outrageous travel costs being incurred by the Ministry of Foreign Affairs in order to accommodate Fwreddy Boy Mitchell's many unnecessary jaunts abroad with his usual entourage of many useless bureaucrats in tow.
Yes indeed, cruel Davis would rather have thousands and thousands of Bahamians, who are now literally impoverished and destitute, go without food to eat so that his government can continue to enjoy windfall tax revenues from exorbitant food and gasoline prices. Truly sad.
JokeyJack 2 years, 7 months ago
Sad, but bills gotta pay. VAT should only be taken off of condoms.
bahamianson 2 years, 7 months ago
And beer
bahamian242 2 years, 7 months ago
This is the right move! The Financial experts at the MOF have had this on the table for a while. The people do not know the full facts of this VAT matter.
tribanon 2 years, 7 months ago
Are you talking about the same "financial experts" at the MOF who have our country mired in unsustainable national debt and many of us over-burdened with all sorts of taxes and fees we can no longer afford to pay because of soaring food and gasoline prices?
And who are you to condescendingly say the people don't know the facts? Unlike the "financial experts" at the MOF, most people know full well what they can and cannot afford, and right now too many of us are struggling to pay for both food and gasoline.
JokeyJack 2 years, 7 months ago
Of course the real issue here is those people who sneak into our country and work under the table dont want to give ANY of their money to our Treasury. Those speaking against VAT on breadbasket items are their apoligists and the ones who profit from their "cheap" labour. Of course their labour aint really cheap because Bahamians have to pay for free clinics and schools for their half dozen children per mammie. Now flour and turkey-fly gone up. That's good.
sheeprunner12 2 years, 7 months ago
Halkitis is not telling the ppl that they are wasting the VAT money.
The politicians are just squandering the VAT money and looking for more.
The ppl are just paying VAT for nothing
tribanon 2 years, 7 months ago
OPEN LINK BELOW FOR SOME REAL NEWS....
https://caymannewsservice.com/2022/04/u…
And If you then click on BVI Governor Rankins' report published yesterday, you can almost substitute Bahamas for BVI throughout the report when reading it.
JokeyJack 2 years, 7 months ago
Yes, you are correct. But of course UK won't suspend our "Constitution" (Independence Order of their Parliament) and take us over because they don't care about us. Bahamians will still be dancing on July 10th. Bahamians dont care about Bahamians either. Don't Stop the Carnival.
birdiestrachan 2 years, 7 months ago
Mr: Halkitis is very high on any intellectual scale.. If the FNM Government cared about poor people they would not have increased VAT by 60%.
Rich people and businesses buy breadbasket items. never mind the FNM and their followers. with their noise about the poor and breadbasket items. it is just political fluff
DontAssume 2 years, 7 months ago
@birdiestrachan...what does "supposedly" being high on any intellectual scale, have to do with common sense and tangible reality. The cost of food is extraordinarily arduous...plain and simple (that fact is not political); however, your deflective diatribe is.
The "rich people" and "businesses" are able to purchase breadbasket items, without being concerned about where additional funds for other bills will be found.
You, a PLP propagandist calling out a FNM propagandist, is the proverbial "pot calling the kettle black". All of you are insensitive to the plight of the destitute in this country...as you are afforded appointments and other financial opportunities on the backs of the hardworking taxpaying Bahamians not in the political-clique.
tribanon 2 years, 7 months ago
@birdie, you claiming Halkitis "is very high on any intellectual scale" wins you the "Joke of the Month Award". You either don't know Halkitis very well, or your bar for being an intellect is set at a very low level.
tribanon 2 years, 7 months ago
The U.K. Government is about to suspend the constitution of the British Virgin Islands for at least two years in order to protect the residents of that U.K. Territory from rampant corruption at all levels of its government that simply cannot be fixed by its own democratic voting apparatus.
It's a crying shame The Bahamas has no similar protecting 'big brother' to swoop in and do likewise for the Bahamian people. Like the BVI, we are in desperate need of a complete cleaning of our political house that has for decades now been commandeered by a corrupt and elitist political ruling class. This corrupt ruling class, whether they be of the PLP or FNM persuasion, really could not care less about the vast majority of the Bahamian people as is evidenced by the current dismal state of country's affairs and the continuing very serious decline in just about every aspect of the Bahamian way of life.
Corruption has been rampant throughout our country's system of governance for many decades, especially at the higher political levels, with no solution available to Bahamian voters at the polls given our current seriously flawed two-party system. And sadly our successive Governor-Generals have all been nothing but useless figure-heads of state ever since July 10, 1973.
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