The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s finance spokesman yesterday urged the Government to reintroduce 12 percent VAT on high-value property purchases to finance his call for expanded tax relief on foods.

Kwasi Thompson, ex-minister of state for finance, told Tribune Business that the Minnis administration’s implementation of higher-rate VAT on property purchases over $2m - which was reversed by the current government - should be reinstated to compensate for taxes foregone by eliminating the 10 percent levy on “all essential healthy food items”.

While not identifying or defining such products, he argued that Bahamians need further cost of living relief given that the Central Bank recently revealed that food and non-alcoholic beverage inflation for the 12-months to end-July stood at 10.4 percent.

“We have to find ways of paying for this,” Mr Thompson acknowledged to this newspaper.”One simple way of paying for this is to reinstate additional VAT on property transactions worth $2m and above. When they came to office they reduced it from 12 percent to 10 percent.

“If they revisit that, that is something that will bring in additional revenue. At least look at that to offset some of the adjustment.” The Davis administration eliminated the 12 percent VAT on high-value real estate purchases, arguing this would create administrative simplicity.

However, Mr Thompson countered: “We are in crisis. It’s far more important to bring relief to ordinary persons, those who need it and are desperately in need. That should be the priority. There are governments that have taken this position and adjusted that, even on a temporary basis, because they have to bring relief from the inflation issue.”

The Opposition finance spokesman’s call represents an expansion of the relief his party has previously called for in just eliminating VAT on so-called ‘breadbasket’ items. “The PLP Government must act immediately and remove VAT from all essential healthy food items,” he argued.

“This PLP government must move beyond just talk and follow the example of governments all over the world who have taken definitive action to combat high food prices and the inflation crisis by removing VAT from essential healthy food......Studies have also shown that an effective way of encouraging healthy eating is by making healthy food cheaper.”

Mr Thompson urged the Government to consult with “major food stores and listen to businesses and consumers to come up with a VAT-free list of essential healthy food”, and also “expand the traditional breadbasket list to include healthier food, such as fruits and vegetables”.

“Use the examples of other countries that have changed their course and removed VAT from essential food,” he added. “In Portugal, the government has removed VAT from essential food temporarily to bring relief from high food prices. In Spain and Germany, the government has taken similar measures. In addition, the Caribbean country of Trinidad and Tobago has done the same.

“The PLP government must be concerned and take action to mitigate the impact of food price increases on all consumers, particularly the vulnerable. We again demand the Government cease its stubbornness and mitigate the impact of rising food prices by immediately removing VAT from essential healthy food items, such as fruits and vegetables and other healthy foods.”