According to The Tribune Business of Tuesday, August 8, 2013, the government is suggesting that there will be no drastic price increases when Value Added Tax (VAT) comes into effect on July 1, 2014.
So I completed a couple sums to see what the possible impact might be as shown on the graphic on the left.
There is no doubt the cost of living will be impacted – and dramatically – as a result of these additional taxes.
As Deloitte South Africa put it in this 2012 paper (pdf);
"…Economists mostly agree that an increase in tax rates in a tepid economic environment will depress growth.
"Simply put, and increase in the VAT rate will ultimately be passed on to the final consumer as it will make goods and services more expensive…"
Maybe someone can explain what it is I do not understand, and what Deloitte misses about the impact of this new consumption tax called VAT?
like Legislation, easy to pass, much harder to repeal,
governments are loath to “give up” revenue and control they have given themselves.
while these alternate tax structures are ALL driven by the requirement to lower if not eliminate import taxes,,viewed internationally as “barriers to trade”
They have until 2025 to get them lowered.
No doubt, the overlap is viewed as a Cushion, to be enjoyed to the extent it can be.
me thinks a bag of rocks make a terrible cushion.
bureaucrats, like intellectuals should really come up for air occasionally,
As they really can go off the deep end of bad reasoning!
“Barriers to trade”, what barriers to trade?? Custom duties are not barriers to trade as they are an add on cost paid by the merchant just as VAT is an add on cost (tax) paid by the consumer.. Take the example above of the $25 haircut.. There is no custom duty paid on a haircut only an increased cost of $3.75, the VAT paid by the consumer.. The same is true of any services purchased in the Bahamas.. Every business establishment in the Bahamas will soon have a silent business partner who will collect 15% of a business gross revenues.. Value added, what value is added?? You be the judge..
Both “barriers to trade” and “valued added” are complete misnomers as our import duties are not a restraint to trade and there is no valued added to increase the worth of a good or service other than government revenues.. This simply is just more bunk feed to the Bahamian government by the so-called international community to be shoved down the throats of the expecting Bahamian people..
What is highly dangerous for the Bahamian economy and public-at-large is that such regressive tax policies as VAT will take scarce funds from the private sector (business) and ending up in the public sector (government) where it will be allocated to more wasteful spending.. Already some small business firms are closing their doors resulting in increased unemployment and lower economic growth..
Where this will end is anyone’s guess, but one thing is for sure, the repercussions of a regressive VAT on the Bahamian economy could be highly destructive.. What is sad is that again the government is either not being truthful with the people or that it has no idea of what it is doing.. Perhaps, it may be just a combination of both.. You decide, we are now less than a year away from possible economic ruin.. VERITAS
So true Tradewinds.The only value added is more money for the politicians to squander like they always do.Why should we have to pay for their bad management ? That is all it boils down to.This VAT is very bad for our country & needs to be stopped.How in Gods name can they say there will be no Increase ? It just tells you that they think we are all stupid,especially since they are so much smarter than us !!!
The record of successive Bahamian governments speaks one clear message; there is no difference in either of our political parties when it comes to economic policy.. Both political parties support bigger and larger governments funded by higher taxes on the backs of the Bahamian people, and larger borrowings of funds resulting in what we have today, an unmanageable and out-of-control deficit.. This had created a stranglehold on the Bahamian people as they are moving closer to their breaking point.. Increased government control and power expands and consolidates class differences between the affluent or the political elite and its bloated bureaucracy and the less fortunate poor or the majority of our people.. Our once growing middle class is falling gradually below the poverty line as the costs of living exceeds household incomes.. What is the governments solution?? More of the same failed policies that got us into this mess and that are marginalizing more and more Bahamians..
What the Bahamas desperately needs is a new direction in economic thinking, one that represents the virtues of prudence in the country’s economic and financial policies.. Government must govern in the best interest of all the people and not the interests of the narrow twenty percent privileged class.. Such a “New Direction” in economic thinking will be painful at first as all Bahamians must sacrifice and do their share in our National Interest.. To continue on our present imprudent course can only lead to our financial collapse and self-destruction in the long-run..
We the Bahamian public know what must be done as now is the time to act, to speak up and to be heard and tell the government to change its course, to do the right thing by taking a “New Direction” in economic policy and save the Bahamian people from the bondage of economic serfdom..
I’m with you all the way
I did say, “viewed internationally”.
I agree that from our perspective they cannot, as we trade very little.
Our Government heads of departments have been fed a steady diet of international perspective and pressured to “reform” along their lines.
This reinforces their ever increasing need for more revenue, with very little internal involvement, aside the typical grumble an gripe in small business circles whenever something arbitrary to sensibility and often the law pops up.
Also, with the Government itself being the biggest impediment to economic growth or success, and their typical haphazard approach to any change, and IMF dollar devaluation threats, our fools are still spending and extending.
We are in for a rough ride.
By the time the VAT is finished with us our dollar will be devalued anyway, a big slow down in revenue to pay off our debt. Maybe if the politicians thought they would not have anymore money to piss away they would think twice about this VAT nonsense.
they will not think about not having anymore money to Piss away until after the fact!
Unfortunately we face devaluation both with and without VAT and other new tax regimes recently imposed.
Our fiscal management is about as good as our detainee management!
Wake up Bahamas, the government is forcing the foreign imposed VAT down our throats.. Why doesn’t the government subject this issue to public referendum?? If we can do this for gambling, we certainly can do this for VAT which will negatively effect every citizen and resident.. Could it be that the government knows this regressive tax will be rejected by almost every voter.. Aren’t we supposed to be a government of the people??
Now is the time for a “New Direction” for the Bahamian economy which will in the long-run foster increased employment, encourage domestic investment and economic growth.. Wasteful government spending must be cut across the board in order to reduce our crippling deficit.. The sheer size of our bloated government must be cut back in annual stages which will save tens of millions of dollars annually.. In four years we should be able to have a balanced budget just by cutting the size of government and providing the necessary incentives to encourage investment and economic growth.. Public sector corporations would be privatized or be closed down in order to eliminate government control and corruption while installing competent and capable management.. The “New Direction” would be a win win situation for the Bahamian people..
I thought what the people wanted counted to some degree in their own country not what the government wants. They need to consult business people in the Bahamas, not parliament. I do not trust one of them, not one. Their own actions have created the lack of trust with almost all Bahamians.
It is well past the time for a smaller sensible government who is not after their own gain. Worry about the country rather than your seat. Will common sense ever kick in again in this country ?