NASSAU, BAHAMAS — The Progressive Liberal Party (PLP) yesterday promised that if elected to govern, it would recommend the country’s minimum wage be increased to $250 per week and reduce value-added tax (VAT) to 10 percent “across the board” for 12 months.
Similar promises have been previously made by the current Minnis administration, which pledged to increase minimum wage and implement tax-free zones while on the campaign trail in 2015.
Chester Cooper, PLP deputy leader and the Exumas and Ragged Island member of Parliament, while unveiling the party’s 10-point economic plan to “Recover, Rebuild and Revolutionize” the Bahamian economy yesterday, noted: “With so many people unemployed, those who are working have to support greater numbers of people.
“We will recommend to the National Tripartite Council that they move towards a minimum wage of $250 per week in the private sector.”
Cooper noted that under the previous Christie administration, minimum wage was increased from $150 per week to $210 per week.
“Our goal is to phase in a livable wage, so that everyone who works is able to live with dignity and in a way that is acceptable in a modern Bahamas,” said Cooper.
Trade union leaders such as Trade Union Congress (TUC) President Obie Ferguson have called for a minimum wage increase to between $250 and $300 per week, suggesting that such a rise is justified by cost of living increases and the VAT rate hike to 12 percent.
Still, private sector stakeholders have pointed out that minimum wage increases will inevitably increase employer costs, which could be passed on to consumers or result in layoffs or hiring freezes.
In December 2019, a few months before The Bahamas recorded its first confirmed case of COVID-19, Prime Minister Dr Hubert Minnis announced an increase in minimum wage for government employees.
However, the National Tripartite Council said it had no knowledge of such discussions.
VAT reduction
Cooper also noted that the PLP intends to reduce VAT to 10 percent across the board.
“Many Bahamians are worried about an increase in their taxes, but increasing the tax burden for ordinary Bahamians would be both immoral and terrible economic policy,” said Cooper.
“We will instead reduce VAT to a rate of 10 percent, across the board, for 12 months.
“This is not a huge difference, but it will put consumers in a position to afford a little more of what they need to get by, which will help get the economy going again.
“The government receipts are likely to increase, as more transactions will yield more VAT payments. We plan to re-assess this rate after a year.”
VAT was introduced in The Bahamas in January 2015 under the former Christie administration at a rate of 7.5 percent as opposed to the 15 percent that had been initially proposed.
On July 1, 2018, the Minnis administration implemented an increase in the VAT rate to 12 percent despite having criticized the former administration for implementing VAT while in opposition.
It later made a number of breadbasket items VAT-free and introduced tax-free zones in some Over-the-Hill communities.
Yesterday, PLP Leader Philip Brave Davis, QC, noted: “We must build an economy that is strong enough, vibrant enough, to include everyone.
“We need to focus relentlessly on creating jobs, and we must transform education, so that it can keep up with the rapidly evolving world of work.
“We must constantly look forward and ask ‘what are the core competencies that will be required in future careers’ and ‘how do we plant the seeds now to build those.’”
Davis added: “Yes, in the last few years, we’ve suffered from poor governance, a devastating hurricane and a global pandemic. But the truth is, the economy in our country has been failing to generate enough opportunities for a long time.”
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