Concerns on VAT
Published: Sep 12, 2013
The government is batting 0 for 2 in attempts to bring change or structure to important national concerns. And if history shows us anything, we can be certain that if the same lack of preparation and not informing those affected continues, the VAT initiative will suffer the same fate as the gambling referendum and recent constitutional adjustment exercise.
Maybe someone was looking around for something to tax and VAT seemed like a good idea at the time; but they failed to consider. They should have investigated the term value-added tax. In the majority of cases where VAT is implemented, it is applied to what is being produced. And except that the government has some plans for rapid economic expansion with a focus on the creation of opportunities and not just jobs, they are going to have a problem.
The business community, local and foreign, will be averse to paying additional taxes on what is being taxed already. It is possible that value-added taxation will cause a decrease in value for many; especially those who have to pay the bill anytime government does anything that is ill advised and not thought through.
We have no news on how the present customs regime will be changed or impacted. Does the government plan to have both of them in place 10 months from now? Or are they going to create new agencies and/or jobs?
This government has been prone to some very fundamental mistakes because of a political philosophy that blends political patronage and closet socialism. They forget that when they first came to power in 1967, there was a very educated populace in place and the opportunities were readily embraced by all Bahamians. Because of the presence of “opportunity” the amount of jobs created in the decade 1967 is still unparalleled in the nation’s history.
What they forgot was that preparation and education are on-going exercises for all nations that want to provide the best for their citizens. However, the retreat into social promotion after a decade of prosperity, combined with a drug epidemic that did not leave any family in this nation untouched, harmed us. It has left us a pernicious legacy that we are still struggling to shake off. And, the present uphill battle against crime was birthed in the missteps of our elected leaders just over three decades ago.
We would have been well prepared and ready to take on the VAT exercise if we had done our work in the past. VAT will be a devastating experience for those who are just getting their businesses off the ground and who are in effect trying to create a business culture that balances the consumption-oriented mentality that pervades the present political mindset and any consumer-based society that does not have the ability to feed itself.
If I was in charge, a significant portion of the last budget would have gone toward initiatives that encouraged the development of opportunities that resulted in job creation for citizens. I would have put the peoples’ money where my mouth was and did a Stafford Sands – something extreme like making the cruise ships close down in the harbor. I know we cannot do that now but this is the mindset the government should be taking – not allowing “foreign investors” into virgin economic territories where they bring in enough money to wash away local competition or initiatives.
I can give the government a warning, and they can take it if they want to. Those who are adversely affected by VAT will pass their expenses on to the client or the Public Treasury, or price themselves and us out of the market; and this is going to be the wake-up call for the issues in the next election. Those who are not constrained because there is no legislation to control their spending do not have enough money to deal with what I see will be the nasty downside of this ill-timed, ill-informed exercise.
If they can pay and have others pay them, there will not be a problem; but no one is going to pay twice. Even the members of the ‘status quo’, one of whom probably came up with this bright idea, are going to feel this one if it goes through, especially those older upper-class civil servants who cannot afford to retire even though they are well past retirement age.
Maybe VAT will be good for us, especially if it is not done properly and for the right reasons. We will get the wake-up call that we have long needed and those who govern may learn that getting up on a soapbox in this time or any other requires preparation and common sense.
– Edward Hutcheson