When fellow blogger S3S read this post from January 13, 2014, entitled Mumbo Jumbo from government officials, solicited this link to a very interesting article in the recent Economist entitled, The $9 trillion sale: Governments should launch a new wave of privatisations, this time centred on property, and it is most applicable to the present "discussions" about VAT here at home.

The article sets out asking if individuals were spending more than their income yet had assets that could off loaded wouldn't it be advisable to do so?

An interesting question indeed, but there is a paradox. The same bankers that would advise individuals to do that, do not seem to offer this sensible advice to the governments that owe them billions.

I wonder why that is?

However, there are several other points the article makes that deserve local consideration in the context of the government implementing VAT later this year.

1. Analyse what "public assets" might be sold like the land and sea parks, buildings, Crown Land etc.
2. Britain recently privatised the Royal Mail. Surely The Bahamas can do that?
3. Use private sector financial benchmarking for public corporations.
4. Replace cronies with with experienced managers, but protect them from political interference. (When Sweden did this a decade ago they created "a professionally managed holding company" that lead to a "selling splurge by a left-leaning government")
5. Privatisation not the be all and end all for governments that spend like there is no tomorrow. But, "Selling assets is a one-off that provides only brief respite for those addicted to overspending…"

The most important point from the article is:

"… for governments that are serious about bringing their spending in line with revenues, privatisation is a useful tool. It allows governments to cut their debts and improve their credit ratings, thus reducing their outgoings, and it improves the economy's efficiency by boosting competition and by applying private-sector capital and skills to newly privatised assets."

So far, it does not appear that The Bahamas Government is serious about bringing spending in line with revenues and this is why they see the Value Added Tax (VAT) as their panacea.

With enough political will there are options to the governments present course and VAT is a risk not worth taking in this bloggers not so humble opinion.

It all reminds me of Tom Smith and His Incredible Bread Machine. Click here… or on the image above to read the brief poem by R. W. Grant.