In yesterday's post… I registered my digust with Mr. Arthur encouraging us down the road he took Barbados on. Frankly I'm sick of people that have ruined their own country giving us advise on how to make ours worse!
And just when we thought things couldn't get much worse there, a friend sends this article… to me from Caribbean 360 about S & P further downgrading "Barbados to negative from stable and at the same time affirmed its 'BB+'
long-term and 'B' short-term sovereign credit ratings for the island
that has “fallen back into recession”."
Their VAT rate started at 15%, with a few exceptions, has moved to 17.5%, and now there is speculation they might take it to 21%. Of course the government there denies that 21% VAT is on the horizon, but we know how denials from the political class generally go.
Since I work for an automotive firm I called a friend down there in the car business and asked them what the price of a mid-size SUV costs there to help detemine what their taxation has accomplished. Here's what she said.
The list price is $192,250.56 Barbados dollars or $96,125.00 US dollars. And guess what this price includes?
Import Duty/Excise tax of 45%
Consumption Tax of 100%, and,
VAT of 17.5%
Bearing in mind a mid size SUV here sells for $44,000, this is shocking wouldn't you agree?
Even with all this taxation Barbados still manages to run deficits and their debt keeps mounting.
But seldom do these "leaders" like Mr. Arthur, who might be a very nice guy, connect the dots on how their borrowing and spending and regulations have helped destroy their economy. Heck we hear rumours here that The Bahamas government has to borrow to make payroll as revenue has slipped so badly.
The only thing they can think of as a solution is more of the same tax and spend policies. So investors retrench more and the problems are exacerbated.
As Dr. Chafuen points out here… the US "dollar has lost 98% of it's value" over the last 100 years, yet the Fed, like our bad public policies are celebrated. Go figure!
Those of us that are concerned about our retirement so we do not become a burden to our children or the state are finding the more we try to save, the less our savings will buy.
The accession to WTO and the introduction of VAT will be a further stake in the heart of The Bahamian economy if the government does not revert to its correct role as outlined in our Constitution.
Yet, we have our own Owen Arthur's right here that sing the praises of those Keynesian public policies that have failed the world over.
Prepare yourself for many surprises of worsening government policy when these "ideas" fail to increase government revenue.
The sad thing really is that VAT has been selected (Some years ago BTW) to replace the tax revenue system that has to go away:
Import Tariffs.
It started out as simply as that.
Considered Barriers to trade, the imposition of Import taxes, sometimes used to protect local products, are considered discriminatory to the products of other nations, our supposed trading partners.
The Bahamas however, really have few products to protect.
The products we do produce are certainly not produced in sufficient quantity to supply the local market.
Unfortunately for the locals, these Changes come amid serious Budget deficiency increases caused mainly by continued Government overspending, over promising and waste every single year for decades.
The Government however, is convinced these Tax regime changes will yield increased revenue, and so with external Organizational pressure mounting, Are eagerly anticipating increased revenue, hurrying towards it like we have never seen Government hurry before.
In Reality they are more walking backwards really fast!
It is a shame Government administrations have not been more open and Honest with the people, but, I suppose it is difficult to promise them the world, then have to explain why it isn’t happening as promised.
I mean the real reasons, not the pass the buck response.
Unfortunately “we the People” have not exactly been diligent in our study, awareness or even realization of our new reality.
This is not new.
This has been a scheduled series of benchmarks to be met and committed to for 20 years of negotiations.
We have missed many deadlines, begged off on no doubt, especially during our “Political season”.
Hard to negotiate when your stumping for a year.
While most other nations have literally dozens and hundreds of personnel involved in the literally hundreds of different aspects of these “trade agreements”, which are really akin to forced compliance from external ex territorial entities,
we have had but a handful.
who won’t level with us.
By the way, the reason some specialty/individual taxes were eliminated, is because if left in place they would amount to double taxation, if VAT was simply added.
A no no under WTO rules.
Like it or not, the Bahamas is subject to “trade liberalization” in both Goods and services.
So far, we have seen only the changes concerned with goods, save the liberalization of the Restaurant and entertainment sectors in the 2010 Budget Communication.
Wait til the rest get opened up.
Bahamians are going to be marginalized in their own country, partially their own fault,
but mainly through the actions of their elected leadership over the last 30 years.