3rd December 2019
Opposition Leader the Hon. Philip Brave Davis responded to BPL Minister Desmond Bannister that the government is likely to raise the $300 threshold for VAT waiver on electricity bills. Mr. Davis called it a public relations gimmick that will not alleviate the challenges and pain of BPL customers in the long term.
“This is purely a public relations gimmick to attempt to solve and to allay the fears of the Bahamian people and to make it appear that something is going to happen for them. Trust me, this may look good in the near term, but it will not alleviate the challenges and pain that is in store for the Bahamian people.”
Accusing the government of not understanding VAT, the Opposition Leader opined that adding or decreasing the rate by cherry picking various items would create uncertainty, a bureaucratic nightmare and ultimately increased business operating costs.
“It also demonstrates a misunderstanding of Value Added Tax (VAT). The reason why VAT is an acceptable way of taxing is because of its simplicity – it’s an across the board tax and when you start tinkering with it – adding or decreasing the rates on various items – you create uncertainty, a bureaucratic nightmare and of course instead of (goods and services) costing less, it cost more because of the manner and time it takes to determine what items or what rate of VAT should be on any given item.”
Arguing by analogy, the Leader used the challenges local merchants are now having with the Customs Department’s Electronic Single Window (ESW) system to underscore his point. Mr. Davis said “we are seeing it now with this click to clear program that they have for importing goods. Merchants are already screaming about the inefficiency of the program. This is directly due to the disparity that applies in the application of VAT.”
Blasting the government’s policy on its VAT rates variation, Mr. Davis said that the Government’s constant fall back on decreasing VAT by cherry-picking various items to respond to the criticisms of adding extra burdens on the Bahamian people “is a confession that the increase in VAT to 12.5 percent was ill-thought-out (and) an increase in VAT by sixty percent is having a deleterious effect on our economy and its growth.”
Turning his attention to the government’s strategic object regarding the Rates Reduction Bond, the Opposition Leader said the people are in the dark on the program’s dynamics and expressed no confidence in the government’s ability and general competence to negotiate good deals on behalf of the Bahamian people:
“In respect to the specific idea of raising the electricity billing threshold to make a sum higher than the now 300 dollars VAT exempt, again we don’t understand the dynamics behind this and to what number it will be increased and until such time as we understand what the arrangements are in relation to raising this $650 million through the Rate Reduction Bond, we will be shooting in the dark always as to understanding what is going on.
“Our challenge is and will always be, we cannot have any confidence in the negotiating skills or ability of this government. We have seen it time and time again where they have negotiated some of the worst deals on behalf of the Bahamian people and this requires negotiating skills. This requires knowledge of the money market. This requires astute and forward thinking principles to ensure that we get the best deal possible.”
The Leader addressed these issues during a trip to Green Turtle Cay, Abaco, on Tuesday, 3rd December 2019.