On the other hand, he used this reasoning as his spring board to complain about tax dodgers, to, in effect blame them for the country's debt woes because many Bahamians do not make good on their tax obligations to the government.
Paying homage to Prime Minister Perry Christie, he suggested the PLP is fiscally responsible. I wish this were the case, but the facts sing a somewhat different tune.
Successive governments, FNM and PLP, have spent and borrowed the country into the fiscal mess it's in, to the tune of $6 billion or more, if contingent liabilities are included, and no amount of smoke and mirrors can change that.
In fact, during the height of the economic boom, ending in 2007, the PLP government had collected more revenue than at any time in the country's history at that point, yet still ran deficits averaging of $178 million per annum from 2003 to 2008. So neither party smells like a rose in this, and blind political allegiance won't make it any different.
However, he is right that far too many Bahamians do not pay their taxes. Maybe for convenience, he leaves out the fact that they are facilitated in this practice by those with the responsibility to enforce the tax laws of the land.
It seems a tangled web of deceit exists that knows no political bounds. Some would argue this is worse under the PLP than the FNM, but the border fraud at the airport he alludes to is an open secret. The country is only now beginning to understand the tax dodging that exists in real property taxes and this is equally as shocking as the smuggling he outlines.
The fact of the matter is the government has recourse under the law but choose not to enforce it.
His defense of the government's plan to implement VAT "in spite of the defeaning din of dissent" against it, is that they must do this to protect the full faith and credit of the country seems weak. Taxpayers are suggesting there are better ways to get the country's fiscal house in order, rather than a Value Added Tax, but this entails fiscal discipline. Something that successive governments have not been willing to consider.
While the lack of will to collect the taxes he outlines adds to the debt burden, government's continual spending more than it collects is the mammoth in the room.
In other words it's not the tax dodgers that have caused this mess. Some four decades of spending more than the government takes in and borrowing to cover the shortfalls, the burgeoning and expensive bureaucracy and wonton waste seem the more likely culprits.
One thing we all know is, we cannot expect to tax the economy into growth. Increasing the tax burden will only slow the economy even more. What then?
Only a fool would borrow more money to pay off maturing debt.. As the nation’s financial Credit Rating comes under increasing pressure from the addition of greater debt financing and financial deterioration, the net cost of that debt burden (interest paid) increases, making the country’s debt service capacity more difficult to honor.. When the country’s Credit Rating is cut, its outstanding debt declines in financial value making it far more expensive to refinance existing outstanding obligations.. But as the fools will tell you, as long as the country is financial solvent, than maturing debt can be refinanced even at junk bond rates.. However, such financing will be dependent on what investors consider to be the real value they assign to solvency on the country’s pro-forma balance sheet.. Given the country’s current negative economic outlook, new deficit financing will be speculative at best where credit and solvency risks are compounding..
This is a most dangerous situation we now find ourselves in, where hopefully sharper minds will prevail over the usual conventional and lackadaisical thinking.. VAT will not benefit the country’s financial predicament; VAT will only compound this ominous situation eventually forcing huge cuts in government spending and massive cuts in public sector employment..