In The Bahama Journal of Friday, February 14, 2014, Mr. Peter Turnquest (FNM) M.P. and Shadow Minister of Finance is quoted as saying companies won't feel the effects of VAT, only the every day person (consumer).
While he is right in very basic terms, the resulting price increases in goods and services (the impact on the consumer) causes a change in purchasing habits. When people buy less, profits decline and businesses fail.
That's a simplistic model, but I think you get the drift. But everyone makes choices on how they allocate their hard earned money. The result of a bad public policy.
Mr. Turnquest also leaves out the increased costs to business for the administration of the governments tax programme. While some businesses can pass this on, others can't for two reasons. First, they might have reached their pricing limits or second, they might be under price control so have to absorb losses as a result.
I understand the politics, and the fact he thinks he has to placate the "small man" at the expense of the so called merchant. But The Industrial Decalogue, by Rev. William John Henry Boetcker is instructive:
- You cannot bring about prosperity by discouraging thrift.
- You cannot strengthen the weak by weakening the strong.
- You cannot help little men by tearing down big men.
- You cannot lift the wage earner by pulling down the wage payer.
- You cannot help the poor by destroying the rich.
- You cannot establish sound security on borrowed money.
- You cannot further the brotherhood of man by inciting class hatred.
- You cannot keep out of trouble by spending more than you earn.
- You cannot build character and courage by destroying men's initiative and independence.
- You cannot help men permanently by doing for them what they can and should do for themselves.
Consumers and merchants are all a vital part of the economy. Damaging one with a bad public policy like a Value Added Tax inflicts harm on the other.
Increasing prices without due regard to competition will usually only work until the consumer finds a better deal.
Rev.William John Henry Boetcker is right on the money.I just don’t understand why the politicians seem to be the only people who can’t see too well,what is their problem ? What if it were their business that was going to be affected by this stupid tax,would they still be plowing full steam ahead ? We are dealing with very out of touch politicians,that is for sure.
Now political grandstanding by the FNM seems to be their inept and pathetic response to the coming disaster of VAT.. Every resident and business entity in the Bahamas will be adversely affected by this Very Awful Tax.. Consumers will get far less goods for the same amount of money they spend today.. Or the same amount of goods they purchase today will cost them about 20 percent more.. This is an adverse increase in the cost of living which will be felt by every mam, woman and child in the country.. Vat is a recessionary and inflationary tax that will increase the country’s poverty rate by about 10 percent or higher.. This will only compound our current economic disaster and will have an adverse effect on much needed investment..
As for the private sector, many firms will be hard pressed to survive as some have already closed their doors for good.. Bay Street merchants, a source of local employment, are going to be severely pressed by stiff competition from the major suppliers of their customers, cruse ship visitors.. Prices for similar goods sold on Bay Street are about 5 to 10 percent cheaper in the cruse ship stores.. When the 15 percent VAT is added to Bay Street prices, the cruse ship outlets will have about a 20 to 25 percent price advantage.. This will lead to major cost adjustments as Bay Street merchants will struggle to survive.. Bahamian employees will suffer the blunt of these VAT forced cost cuts at no fault of their own..
To say that “only the small man” will feel the pain of VAT is outright nonsense.. Every individual Bahamian and business firm will feel the adverse effects of this horrible policy.. Increased poverty and increased unemployment will more than likely be the economic driving forces for increased crime.. Our nation is heading on a course of potential destruction and even failure..
VAT must be opposed and the citizens must demand that government trash VAT.. Government across the board must downsize, government must cut wasteful spending, government must downsize the bloated bureaucracy and government must balance its budget in the near future.. Lets face the hard facts, the out of control government is the real problem and and not the meaningful solution.. Wiser heads must prevail and introduce financial prudence as a future guide to create a revised and growing Bahamian economy..
The FNM,the PLP,all washed up “has bins” in my opinion,they all suck & have sucked for some time now.They think they are so smart but in reality they are a bunch of dumb idiots in my opinion.Why do they not lead by example & STOP the spending ? It is well past the time for us as a country to shut them down,they work for us. They need to get real & stop all of this nonsense.In the Turks all of the business people got together,signed a letter & the VAT was stopped.Maybe because the government actually listened to the people,just maybe.
A few truisms, to follow on those of Rev. Boetcker,
1) A prior FNM Administration committed the Bahamas to VAT.
2) These idiots are meddling in things they neither understand, nor can create or repair themselves(once they destroy it).
3) Few in the general population can wrap their minds around fiscal responsibility, or the details of this method of increased taxation.
4)Everyone will sure as hell feel it, but the private sector must ensure that the blame is placed at the feet of the instigators, those who incured the debt, not at the feet of business people.
5) Income tax will be short on the heels of VAT, as VAT hands over the books of every registrant, the information required by those who would appropriate the wealth of others for their own use, under the guise of governmental largess.
Sorry my friend these so-called “bunch of dumb idiots” as you say are politically in charge of our country and they were clever enough to be elected to high office.. Perhaps you would wise to read up on the physiology of political mentality.. What you will find is that most politicians are all alike and one and the same..
Think for a moment and you will see that there is little meaningful difference in our two political parties or the individual composition of their parliamentary representation.. Both of our party’s support a larger government which increases political power and control over the electorate.. Both parties support increased deficit spending and more regulations which increases the size of government and the bloated bureaucracy.. Both support deficit financing as a means of increasing revenues and now both are forced to accept VAT as the debt well is drying up.. As a result we are governed in the sole interests of party and self-interest to the determent of the country’s greater National Interest.. Without governance in the National Interest, we are losing our way as a sovereign, free and independent nation..
Today so many Bahamians talk about taking back the country, but we must ask ourselves, take back the country with what and by whom?? We only have more of the same old political leadership and competence which is at an all time low.. Guess we have become the victims of our own political short comings and potential failings..
Still does not make it right Tradewinds.We as a people need to demand smaller government & we both know that is not even a long shot.
We know we have a corrupted system of governance where the wealthy political elite call the shots using government revenues to suit their own purposes.. All the people’s cries fall on deaf ears as the people have NO meaningful representation or voice in government.. This is our political shortcoming, a false sense of democracy where we are told who will be represented on the election ballet as we vote for a political symbol and not an individual.. To call this democracy is sheer nonsense for our so-called democracy is nothing more than social authoritarianism.. We have only government for the benefit of government and not for the popular electorate.. This concentration of power has resulted in class division, where the political ruling class determines who runs for a specific political office..
There is no room for constructive thinking outside of approved political dogma.. VAT is an example of his type of structured thinking where positive and practical thinking and alternative solutions are ignored and rejected for impracticable and just plan misguided decision making.. In the end, our failed system of representation has brought about an unchecked process of governance that is rapidly taking our country down the road to economic failure.. What is rather sad is that government is to blind to comprehend what they are creating for our country’s limited future.. We are confronting an economic crisis of frightening consequences which government refuses understand the magnitude of the economic storm we are sailing blindly into.. Time to change course before it is to late and save our nation from pending financial failure..