VAT exemption measure on light and water bills made permanent
NASSAU, BAHAMAS – Less than 36 percent of the Bahamas Power and Light (BPL) customers the government projected to experience relief from its value-added tax (VAT) exemptions on certain electricity bills last year benefitted, according to figures provided by Minister of Finance Peter Turnquest yesterday.
The government increased VAT from 7.5 percent to 12 percent in July 2018.
VAT was later exempted on electricity bills under $200.
In November 2018, it was revealed that more than 5,000 BPL customers collectively owed the power provider $5.3 million, leaving them off the grid
In response, the government increased the exemption ceiling for electricity bills from $200 to $300 in order for more Bahamians to keep the lights on, amid the soaring prices of energy.
At the time, Financial Secretary Marlon Johnson said 63,000 of the 90,000 BPL residential customers will benefit from the exemption of VAT on bills $300 or lower.
Minister of Public Works Desmond Bannister also noted that 64,085 Bahamians had electricity bills $300 and lower in October 2018.
The measure was expected to run until June 1, 2019.
During the budget communication in Parliament yesterday, Deputy Prime Minister and Minister of Finance Peter Turnquest announced that the measure set to expire in June will be made permanent.
He also announced that water bills under $50 per billing cycle will continue to be exempt from VAT.
“You would recall that the government earlier in the fiscal year increased the VAT zero- rating on light bills from those under $200 to those under $300,” Turnquest said.
“It was approved as a temporary measure that was to expire at the end of June. I am pleased to advise that this higher ceiling has been made permanent, and customers will continue to enjoy VAT zero-rating on electricity bills under $300.
“Water Bills under $50 per billing cycle will also continue to enjoy VAT zero-rating.
“I can also announce today Mr. Speaker that as of March of this year over 23,500 households have benefitted from this elimination of VAT from these utilities.”
The average residential light bill in the country increased approximately 45 percent between October 2017 and October 2018, according to data provided by BPL.
Meanwhile, the fuel surcharge, which makes up the majority of consumers’ bills, has dropped in recent months from the artificial maintained rate of 19 cents per kilowatt hour.
According to BPL officials, that rate has been passed onto customers despite sporadic increases over the last year.
As of the April billing cycle, BPL bills reflect a fuel surcharge rate of 17.77 per kWh, representing a 6.4 percent drop.