Nassau – Opposition Leader Philip ‘Brave’ Davis says he cannot support the presentation of the 2018/2019 budget as its various increases in areas like VAT only oppresses the poor and provides for the rich.
He noted that the increases in VAT being proposed is ‘symtomatic’ to the disease of mismanagement, but not the root cause. The root cause, he explained, is more frightening as it is simply the inability of those who have responsibility for the Bahamian people’s fiscal well-being, to manage it in a responsible manner. Therefore, Davis said as a responsible Opposition, his party cannot support any of the increases which have been proposed as it oppresses the poor and provides for the rich.
“Without notice and without consultation, the government has increased VAT to 12%, a whopping 60% and cannot explain credibly why it has had to do so,” he said. “The Government says it met unpaid bills of around $750 million, but has gone out and raised $2 billion. It is the worst of times because the government cannot credibly explain what it has done with these borrowed funds.”
Davis warned that an increase of 12% in VAT will result in an increase in hotel operational costs, driving up room rates and food & beverages prices. “I note that the minister is postponing the 12% effect until for this sector,” he informed. “The fact that this postponement was necessary speaks volumes of the ineptness of your decision making process and incompetence in not being able to discern the impact that decision will have on the industry.”
The Cat Island, Rum Cay & San Salvador MP said investors are looking for jurisdictions where they can make a profit and where the cost of doing business is reasonable. This, he added, was exactly the course in which the PLP administration was headed when they implemented VAT at 7.5%.
In fact, he revealed that the PLP government had been able to arrest the challenges of revenue growth which it met when taking office in 2012 by the successful introduction of VAT at 7.5%. He stressed that it was this new form of taxation by the PLP that can point to a progressive reduction of the deficit.
“I say….that the focus on tax increase, in particular the outrageous increase in VAT, runs a high risk of reducing economic growth and the real possibility of plunging The Bahamas into a recession, a double-dip recession if you will,” he said. “It is a proven fact of economics that tax increases in a flat economy always leads to a slow down and a down turn in economic growth.”
The increased taxes on Bahamians as proposed by the FNM government, he pointed out, will have a negative Impact on their disposable income. This, he continued, together with a low economic growth, will result in there being a substantial shortfall in VAT projections.
The FNM government, he advised, should create a better plan as their rush to balance this budget through the policy instrument of taxation, is unfortunately being done at the expense of increased human hardship and suffering.