Without releasing any details of their proposition for VAT, here's some of the responses received from the Government to date.
Curious indeed. Not one reasonable refutation with "their facts".
“The study is disconcerting and disingenuous in its approach and findings, trying to debunk the VAT as an option for The Bahamas. Notwithstanding Mr. Godsell’s citation of many scholarly articles on taxation, his work does not meet any rigorous academic standard.”
“Just listening to the results, it doesn’t sound like a very credible study,” …"
“It’s nowhere close to that. I would not expect the administrative costs to be anywhere near the magnitude suggested; definitely not.”…"
“Administrative costs in excess of 10 per cent seem to be unrealistic.”…"
"described as “not credible”…"
“substandard” and “disconcerting and disingenuous” in trying to “debunk” VAT as a tax reform option.
"It also criticised the report as not meeting “any rigorous standard”,…"
"The Ministry of Finance said the conclusion that the Bahamian economy would contract by 2-3 per cent were “not rigorously grounded”,…"
"The ministry concluded by stating that it hopes that the Nassau Institute’s study will receive “more widespread publication, so that it can be subject to public scrutiny”.
Download a copy of the report (pdf) here…
And where is the government getting their info, Afghanistan !!!!!!!!!!!!
What do you expect from government other than the usual stuff and nonsense when it comes to addressing the most pressing economic issue of our times.. In its feeble attempt to response to the Nassau Institute’s comprehensive and factual analysis, the government was unable to site any verifiable and factual data to counter the Institute’s opposition to VAT.. It couldn’t even give a single example of a country that was pushed into adopting a VAT regime that did not experience rapid inflation and reduced private sector capital formation..
In the recent address at the College of the Bahamas by Alejandro Werner, Director of the IMF’s Western Hemisphere Department, Mr. Werner spoke mainly about the advantages of VAT to government and not the disadvantages that will accrue to the Bahamian private sector.. What can we to expect from textbook socialists that see only increasing government revenues as a only solution to blotted deficit.. Admitting that his knowledge of the Bahamas economy is somewhat limited, his economic posture of supporting VAT and an income tax reflects a one solution answer to cure all economic problems regardless of the specific characteristics of the country under review..
It is truly amazing that after sixty years, the IMF has yet to learn or even understand that European socialist solutions are not the economic cure for small, duel sector economies like that Bahamas.. What must be recognized is that the fundamental problem is government imprudence and a return to economic prudence is the only viable, workable solution in the long-run.. Continued tax and spend policies are a recipe for economic failure..
I think that’s because the IMF is made up of progressive left wing nuts that want to force their beliefs down the rest of the worlds throats. They think we all have rights as long as its what they want. They are no different from the politicians who simply can not hear the people who they supposedly represent and they don’t want to hear them at all,that we can see.
Not so my friend.. The IBRD/IMF staff are some of the brightest minds in contemporary economics.. Dr. Werner, a Mexican national, is a Ph.D graduate from MIT and is a well trained economist.. The problem is that economics as a social science has been taught as an indoctrination in Keynesian and Post-Keynesian economic thought.. We all were taught that in recessionary periods, government should undertake larger deficit spending programs to stimulate aggregate economic demand.. The increased public-sector demand in turn would create increased private demand through the rest of the economy.. In other world, increased demand through increased government spending would stimulate growth..
What is missing is that there is no set disciplinary mechanism to stop governments from deficit spending after recovery has occurred.. Governments just keeping spending borrowed money imprudently without any imposed and necessary restraints.. When government, like the United States and the Bahamas, become literally broke and cannot pay back their borrowings, the answer they (and the IMF) always turn to is to raise new revenues regardless of long-run economic impact upon the citizenry.. This is what is happening today in the Bahamas as the government is desperate to extract additional revenues by any means possible..
Enter the IMF that only know one way to address this crisis problem.. Increase tax revenues through a VAT structure which they justify on the basis of tax efficiency.. What they will not admit is the failures in their Keynesian thinking is that Keynesian economics has seldom worked.. In the United States massive government deficit spending programs in the 1930’s and currently, 2008 through 2013 under Obama, have been a total failure as economic recovery has been miniscule at best.. Raising revenues at the expense of the private sector through European socialistic policies just doesn’t work.. In the long-run such policies retard investment and employment in the private-sector and have an inflationary impact upon prices..
If nothing else we should learn, that we should be careful of brilliant experts who advise is biased by their economic training and who only care about raising the government’s revenue base and not the pending economic pain and suffering that will be felt by the people..
Wish they would Overtaxed.. Afghanistan has only a 2 to 5 percent VAT net effective rate..
Tradewinds you said the IBRD/IMF staff are some of the brightest minds in contemporary economics…Choke Gasp ………hardly it’s made up of some of the most leftest intellectuals wannabes and wingnuts in the world, otherwise they would have been elected in their own respective countries, just because one is educated doesn’t qualify them to be experts, good governance comes from good leaders, could you imagine Christine Lagarde as French President ?
Seems the Ministry of Finance has been caught disrobed!
“The Emperor is wearing no clothes” comes to mind.
Economists Study the effects of the actions of those who are the economy.
Those who are the economy do not wait to do what the economists tell them, they act, based upon their own instincts, rightly or wrongly.
The risk or reward is theirs to take.
They act with their own resources.
Governments the world over have leveraged private assets beyond the comfort level, and so are uncomfortable leaving things in private hands.
Economic Group think, in such an insular and educated but narrow form, is dangerous to all mankind.
Bureaucracies, both National and supra-national will always self reinforce firstly, self validate endlessly, and usually exacerbate any issue they are not qualified to fix.
Point well taken Ken, but I was referring to the professional staff members and not elected or appointed Executive Directors at the board of directors level.. As a matter of clarity, Executive Directors are not elected but are appointed by their respective central banks on a rotation system.. They are just civil servants chosen from the staff of their respective central banks.. Upon appointment have little to no influence over agency policy as control is vested as a function of “capital contribution” with the United States and Europe being the principle contributors..
The Bank and Fund professional staff members in contrast are recruited from government and top academic institutions based upon their education and professional achievement.. In many ways they are viewed as a kind of “brain trust” of economic expertise.. Unfortunately, as was pointed out in my commentary, most if not all are trained in Keynesian economic theory and support the application of Keynesian solutions to be implemented by member countries whose economies are close to financial default.. Using VAT to raise additional revenues has become a standard, rubber stamp solution with little regards sector imbalance..
Yes, there are other more practicable solutions to these crisis-like economic problems, but as they are deflationary and entail a more lengthy and painful adjustment process to restore economic balance.. As a result, governments across the board reject such alternative and perhaps more viable solutions..
The acceptance of VAT by both the prior and current governments of the Bahamas appears to be an easy way out, but does not take in to consideration the rapid increases in inflation and the consequential destruction to private sector investment and long-tern real growth.. An economy that grows through increasing public spending is not growing through the creation real wealth in the long-run.. This is where the Keynesian advisers and thinkers tend to error as their support of continuous public sector spending leads eventually to government imposed socialism and control..
Just look at what Keynesian economics has done to the United Kingdom and what is happening now in the United States, and you will see how Democratic Socialism takes root and destroys individual initiative and personal freedom..