by Richard Coulson
Excerpt from Business Bites first published in The Tribune June 5, 2018
I see the new VAT-free Bread Basket will now include mustard. Why not ketchup? How did the Government’s expert nutritionist decide which flavoring is essential in the diet for the cash-strapped family?
Also cheese: does that include brie, camembert, and roquefort? Or just wholesome American slices? More nit-picking decisions from Government , and paperwork at every food store, is inevitable, all with a cost. Will the careful housewife shopper really see the subsidized purchases of a dictated bunch of staples compensate for the 60% across-board-the-board VAT increase to her total food bill?
Minister Turnquest’s message is full of measures like this, reflecting the hidden political message of “soak the rich”. Clearly he loathes the web-shops and sees them as the prime target for cash extraction—probably our most profitable industry employing 3,000-4,000 people and already paying substantial government taxes. Their percentage tax rate will rise as gross revenues rise, the only industry so treated. In the United States, by contrast, casinos pay federal income tax at the same rates as all other businesses in the same bracket. Possibly more Bahamians now play these legally regulated wagering games than voted the FNM into office.
Similar questions arise about other hidden- agenda measures : why favor residential property insurance premiums over business property? On import duties, why favor clothing and shoe stores, or printing products, or tiles? Or imports of whole salmon and frozen fish fillets, however tasty they may be? In short, through its taxing power, Government is intruding into every aspect of our economy.
Instead of holding the general tax level to the minimum, Government raises it and then carves out exceptions to suit its own views about desirable objectives, a policy generally known as “socialism”, a word that is anathema here but leaves ever deeper traces. Minister Turnquest argues argues that the abrupt VAT increase from 7.5% to 12% is the only way to amortize a pile of debt left by the profligate PLP and maintain our credit ratings and good standing with the IMF.
But a legitimate question can be asked whether he is going about it the right way. We see barely a nod toward true capitalist measures to grow the economy. I could see nothing about reducing or adjusting business license fees. Not a word about privatizing BahamasAir, BEC, or ZNS. Shifting to a contributory pension scheme for public employee is another can just kicked down the road, while unfunded liabilities balloon into the billions. Government’s 100% contribution to their pensions—a vanishing practice in modern economies—is a major drag on the Treasury, real but never publicized.
We all must obey the law and pay enacted taxes. But before the July 1st effective date, public opposition may be strong enough to cause radical modification of this slanted budget.
Mr. Coulson has had a long career in law, investment banking and private banking in New York, London, and Nassau, and now serves as director of several financial concerns and as a corporate financial consultant. He has recently released his autobiography, A Corkscrew Life: Adventures of a Travelling Financier.
