Business experts warn: economy may contract

Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC) Chief Executive Officer, Edison Sumner.

Business experts Wednesday cautioned the government on its proposed 67 per cent value-added tax (VAT) increase from 7.5 per cent to 12 per cent , warning that without proper consultation and the support of the Bahamian people, the additional five percentage points on the tax will not have the desired effect.

Blindsided and appalled is how Chief Executive Officer (CEO) of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Edison Sumner described the business community’s reaction to the increase.

Sumner said businesses are already struggling to pay the 7.5 per cent, and since the Minnis administration’s announcement yesterday, he said he has been fielding calls from business owners who are worried about the additional increase.

Meantime, President of the Bahamas Institute of Chartered Accountants (BICA) Gowon Bowe said, the government’s increase in tax, which Finance Minister Peter Turnquest rationalized in his delivery of the 2018-2019 Budget Communication had to be done in order to grow public funding, may have the opposite effect, as fear and panic could put consumer spending on pause, thus causing the economy to contract.

While it is too early to tell the impact of the tax increase, which is expected to take effect July 1, according to the finance minister, both financial experts said it is not the right time for an additional tax burden on the backs of Bahamians.