Wilson: Changing VAT to 10% benefits small businesses
NASSAU, BAHAMAS — The government believes it is on track to exceed revenue targets for the next six months, according to Financial Secretary Simon Wilson.
Speaking at the weekly Office of the Prime Minister press briefing yesterday, Wilson said: “We believe that, all things being equal, we will exceed the revenue targets for the next six months.”
On the expenditure side, the liabilities and so forth [have] been reduced. It has not been reduced to a bare minimum, but it has been reduced considerably.
– Financial Secretary Simon Wilson
Wilson said the Ministry of Finance was satisfied with the revenue performance in light of the fallout from the COVID-19 pandemic.
“If we look at our revenue forecast against performance, we are $160 million above forecast,” he said.
Wilson noted that the forecasts set by the Minnis administration are being maintained, noting that those forecasts had revenue at a very suppressed level.
Wilson further noted: “The Revenue Enhancement Unit is being formed and is working. We will engage our revenue advisors. We are very excited with what we see in terms of potential for revenue yield.
“On the expenditure side, the liabilities and so forth [have] been reduced. It has not been reduced to a bare minimum, but it has been reduced considerably since I came back to the office.”
Wilson also noted that the government’s debt advisory committee has been appointed, with the government now seeking to appoint a firm that will advise the government on its debt strategy.
“The committee is a functional committee, not just a talk shop, so we want to make sure all the pieces are in place,” said Wilson.
“One of the key pieces we felt was very important was to have a specialized firm to advise the government on how we manage the debt.”
Pointing to the value-added tax (VAT) reduction from 12 percent to 10 percent, which came into effect January 1, Wilson noted that placing VAT back on breadbasket items would aid small retail grocery stores.
This is part of the government’s initiative to bring equity and fairness to the tax system.
– Financial Secretary Simon Wilson
“On breadbasket items, small retail grocery stores could not recover the VAT on sale of those goods,” said Wilson.
“Many small grocery stores had to carry VAT receivables for the government for a long period of time. That change was made, which really benefits small businesses.
“The reduction from 12 to 10 percent covers all goods, including land sales.
“Overall, the tax liability for Bahamians was reduced on January 1. This is part of the government’s initiative to bring equity and fairness to the tax system.”
He noted that based on calculations, the VAT reduction will be revenue-neutral and perhaps slightly positive in terms of revenue yield.
