Like the old radio emergency broadcast system, this is a warning, for the next minute or two, as long as it takes you to read this, you will be subjected to a request.
That request is that you not get lulled to sleep by the PLP's political lullaby that VAT might be reduced to 7.5% instead of 15%.
Take note of the bureaucrats scary movie that the public should only be looking to see how the tax grab can be fine tuned.
All the to and fro aside, the VAT rate is only one of the myriad of concerns and issues with this tax.
First of all a lower rate will only be temporary. Look around the globe.
Second, the new bureaucracy created will be overbearing and costly.
And as David Godsell pointed out here…
- the economic consequences of VAT adoption and elaborate on the welfare loss that can be anticipated for consumers, labourers, employers and the government. Consumers can expect a one-time increase in price levels and a loss of purchasing power.
- Labourers can expect a decline in real wages which will in turn lead to a decline in the labour supply. Businesses and employers with VAT-based sales can expect reduced demand for goods and services, which will in turn reduce their demand for labour.
- Under extraordinarily conservative estimates biasing towards heightened government revenues, we forecast VAT adoption will lead to a $165 million decline in government revenues.
- Simultaneously, we estimate VAT adoption will burden the private sector with $103 million in annually recurring compliance costs and an average of $4,300 in compliance start-up costs for each VAT registrant.
- The report concludes by pointing to failed VAT adoptions in countries similar to the Bahamas and by highlighting contemporary efforts to reduce budget deficits through reductions in government spending.
Hopefully we'll all remember to check back on this post, and others from around the web, and see if we were being fed a lullaby or if in fact it turns out to be scenes from a horror film.
