Wednesday, 24 May 2017

Christie’s VAT Explanation Laughable

After what seems to be a near eternity since the Bahamian people pleaded with this current administration for an accounting on the Value Added Tax regime, Prime Minister Perry Christie, who is also the Minister for Finance, delivered what was a very weak performance on what was billed as the “Report” on Value Added Tax” that he promised. Considering that his Junior Minister failed in previous attempts to explain to the Bahamian people on the VAT’s performance, we were expecting a bit more at this juncture.

It was clear to anyone listening that the “Report” would be thin on analysis, as well as short on actual answers. The Bahamian people deserve better than this and we in the Democratic National Alliance believe wholeheartedly that change is needed and needed now. Considering that the Junior Minister for Finance already went on record stating that there was no possible way for a proper accounting for the VAT revenues and expenditures; and considering that there was no mid-term budget given by Christie or his Junior Minister, this administration not only missed the mark on the point of giving us details on the VAT Regime, but devolved their level of service to the Bahamian people.

What the DNA expected was not simply a vague speech filled with rhetoric, loosely fitted terms and thinly veiled cheek. The DNA expected a detailed breakdown, line for line and proper analysis on how the VAT regime was performing; from what areas and sectors were they receiving VAT revenue from; and what validates the statements by the Prime Minister on the expenditure side with the tax revenue with VAT highlighted. We did not get that. What we got was a rally speech with no substance and misleading terms that we feel are insulting.

In the International Monetary Fund’s last Article Four Assessment for The Bahamas the DNA made note that: “In, 2014 this (PLP) administration doubled the average primary deficit recorded between the years 2005 to 2012 from 1.7% to 3.1%, they have got it back to 1.7% and are “projecting” to have it to under 1% in, 2016. All of this was prior to the introduction of VAT, so what this administration had done is substantially increased spending and then put VAT on our backs to cover their wastefulness, and are not telling the public they have the primary deficit percentage back under 2% and receding.”

Furthermore, the VAT was promoted as a taxation measure that would decrease deficits and reduce the overall debt overtime. But deficits are back to their pre-VAT percentages, as we explained earlier in the IMF’s assessment, and the overall debt has ballooned to over $7 billion, some 80% Debt to GDP and counting. The current deficit trajectory trending will be well over $500 million by the end of this fiscal year.

What Prime Minister Christie’s speech also missed was a chance to break down how VAT was performing as not just a taxation measure, but also how it was performing as it relates to Customs Duties and how it should be administered moving forward. For example, from which sectors VAT was being extracted from primarily and how that is affecting revenue and the overall buoyancy of the economy. He failed to deliver, and we think that he did not even know he had to deliver on that.

Lastly, the Central Revenue Agency, which was supposed to be the newly constituted agency to assist with all of the aforementioned concerns on VAT and overall revenue management, has been set aside by this administration in what we would clarify as a purposely neglect of proper accounting and management protocols.

Friends: It is not going to get better under this administration. It is spend, spend, and spend with no accountability. They must be changed.

Youri Kemp
DNA Candidate for Garden Hills
DNA Spokesperson for the Economy and Finance

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