NASSAU, BAHAMAS — The reduction of value-added tax (VAT) from 12 percent to 10 percent will be one of the first items on the Davis administration’s agenda as the government returns to Parliament later this month, according to Prime Minister Philip Brave Davis.
Last week, the prime minister referred to the nation’s finances as “dismal”, though he did not expound.
When asked yesterday whether this will cause the government to put off any of its commitments, Davis said while a decision has not been made, he has no intention of putting off any commitments.
“I don’t intend to put off any of my commitments; I intend to see how we can work with what we have to get our commitment fulfilled,” he told the media.
Asked what will be first on his administration’s agenda, Davis said: “We know that we have to meet certain commitments that may not necessarily require legislative intervention. For example, VAT reduction requires that, so that will be one of the first items that we put on the agenda.
“We are now looking at recasting the budget because what we are finding is that the budget was not truly a reflection of what the state of affairs were, but rather just a wish list to get over an election.
“So, we hope to revisit the budget and perhaps that will be the second most important thing we do — to recast the budget for the next nine months to enable us to carry out our functions.”
Minister of Economic Affairs Michael Halkitis has said the government does not have plans for new taxes at this time, but the government’s statements that it will focus on revenue enhancement and making sure those who are able to pay do so has given rise to speculation that there could be some shifting of the scales of taxes pertaining to the wealthy.
In the lead-up to the general election, Davis, who was in opposition, said his administration, if successful, would not ask poor and middle-class Bahamians to pay more in taxes, but make sure that “everyone pays their fair share of taxes”.
He said this included ensuring high-end properties pay their real property taxes and foreign-owned properties are on the register and properly valued for tax purposes.
The Minnis administration increased VAT in 2018 from 7.5 percent to 12 percent, citing the need to pay down the national debt and meet the commitments left by the previous Christie administration.
In his wrap-up to the 2018/2019 budget debate, then Prime Minister Dr Hubert Minnis said the government considered raising VAT from 7.5 percent to 10 percent, but determined that was not enough to deal with fiscal pressures it encountered.
Since then, the nation has experienced financial shocks from Hurricane Dorian in September 2019 to the tune of $3.4 billion and the ongoing coronavirus pandemic, which brought the global economy to its knees last March.
According to the 2020/2021 budget, the government collected $845 million in VAT in 2019/2020, $666 million in 2020/2021 and expected to collect $845 million, $993 million and $1.1 billion in the next three fiscal periods respectively.
Parliament resumes on October 27.