Dear Editor,
On April 1, 2025, the reduction of Value Added Tax (VAT) on certain uncooked food items from 10% to 5% on items that previously attracted 0% under the previous Free National Movement government (FNM) took effect. It is not a coincidence that the effective date was April Fool’s Day – a day known for practical jokes, pranks, hoaxes, and mischief. The only difference here is that the jokester is the current administration led by the Progressive Liberal Party (PLP), which is playing the mind games ahead of the next general election after almost four years of hardship on the Bahamian people.
It is common knowledge that the Davis-led administration is on the ropes and staring defeat at the polls. Desperation has set in, and the enticements have started as the PLP seeks to hold on to power, but this is a discussion for another day. This piece presents taxation as Exhibit B in the case of the PLP – a party that once branded itself as the party of the downtrodden and common man but that has evolved into an oppressor of the masses.
Maxims of Taxation
In order to understand the PLP’s assault on the common man using its tax policies, one must consider the maxims of taxation and how this organization measures up. Adam Smith, who is widely known as the Father of Modern Economics, espoused the following maxims of taxation:
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The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
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The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, and the quantity to be paid ought all to be clear and plain to the contributor and to every other person.
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Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it.
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Every tax ought to be contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state.
The PLP’s approach to taxation fails on the fundamental principles of proportionality to people’s ability to pay and taking out as little as possible from the pockets of the people. Even more egregious is the Finance Minister’s boastful demeanor as he touts the increase in tax revenues, which have ultimately come from the pockets of hardworking Bahamians and businesses that have been treated like criminals by the PLP administration.
Nothing Progressive about Regressive VAT
It has been 10 years since the PLP implemented the most regressive tax in the history of the Commonwealth of The Bahamas – Value Added Tax (VAT). This tax disproportionately places the burden of taxation on those who can least afford it because the tax is designed to take a larger percentage of income from low-income groups than from high-income groups. In this regard, the only thing Progressive about the New PLP is the Party’s name.
The New PLP has become progressively regressive, and its recent decisions have reversed the real progress of the first PLP administration in the 1960s and 70s. The New PLP had a rare opportunity to implement a tax system that favors the masses and ensured that those who had more, paid more, but failed to do so because the party is not for the common man who it has claimed to support.
VAT rate from zero to ten to five
When the PLP assumed office in 2021, the party that was supposed to be for the common man increased VAT from 0% to 10% on basic necessities, items, and services consumed by the very people they have claimed to be their main constituents. The items impacted by this bad tax policy were detergents, soap, medicine, medical insurance, water, sanitary products, electricity up to a certain amount, rice, grits, butter, bread, milk, tomato paste, cheese, cooking oil, flour, baby food, and others.
Prime Minister Davis, aka Papa Tax, deemed it appropriate to impose this unfair tax on the common man despite his party acknowledging in its Blueprint for Change that “the cost of living is well beyond the means of middle and low-income Bahamians.” In essence, the PLP knew before assuming office that the average Bahamian was struggling to make ends meet due to the cost of living crisis but still proceeded to make life more difficult for the less privileged. It has gotten so bad that our people have had to choose and still have to sometimes choose between paying their bills and buying groceries. This is why the Davis-Cooper administration must be delusional to expect Bahamians to forget their almost four years of sheer neglect by announcing the imposition of 5% VAT on items that were once taxed at 0%.
Blaming the Masses for their Choices
In response to questions seeking answers to the topical cost of living crisis, Davis and his ministers initially refused to take responsibility for the role they played in the crisis, choosing to point fingers in every other direction. As the queries and pressure continued, a tone-deaf Davis, who had run out of excuses, eventually revealed his thoughts about the plight of struggling Bahamians. The PM blamed the choices of the masses for their struggles as he noted that “cost of living is determined by one’s choices, what one chooses to do and what one does not choose to do.”
Davis’ attempt to clean up his comments after the public backlash was even more demeaning as he referenced the consumption of hamburgers rather than steak. The country’s leader demonstrated a lack of empathy and consideration for the same people his party claims to be the champion of. However, it hasn’t just been the taxes that have driven persons below the poverty line; it has also been the increase in fees, electricity bills, NIB contributions, and other expenses. The point that Davis misses is that Bahamians’ choices have not been extravagant like his trips and lavish spending. The masses are only choosing to live in their country by buying basic necessities and paying their bills. They want a chance to survive; that’s not too much to ask for.
Comparing Philosophies: PLP vs FNM
Exhibit B also highlights a major difference in philosophy between the PLP and FNM. The PLP imposed VAT on VAT-free items and took more money out of Bahamians’ pockets while promising to increase the allocation to social services necessitated by more people needing assistance and becoming dependent on government. The FNM’s approach was to remove VAT on basic necessities and increase the discretionary income of Bahamians – giving them the financial freedom to decide how they spend the savings from reduced taxation rather than depending on social services. It is clear – the PLP wants a dependent society, while the FNM wants an independent society.
As a trade war looms and the global trade landscape shifts, the cost of living crisis is not expected to abate anytime soon. Hence, the impact of the VAT reduction on select items will be minimal. The question on the lips of Bahamians is this: How did the PLP, which started out saying it wanted to wipe tears from every eye, become the party of hardship which has continuously put the tears in the people’s eyes? It is simply because the New PLP is not for the common man.
Arinthia S. Komolafe
