NASSAU, BAHAMAS — Former Health Minister and Elizabeth MP Dr Duane Sands yesterday suggested that the government must reassess its tax structure and implement an income tax, as the country sees significant hits to its economic stability.
As he presented to the budget debate, Sands provided a grave overview of the country’s financial standing and its historic spending.
He pointed to the $3.5 billion in cost sustained due to Hurricane Dorian in September 2019 and the estimated $3 billion spend on COVID-19 in The Bahamas to date, which has ravaged countries around the world, and insisted that the country is in a “tight spot”.
Sands pointed to significant costs passed onto taxpayers, including the operation of state-owned enterprises and millions of dollars in interest costs and principal repayments.
He underscored that 50 percent of the country’s revenue goes on simply paying off debt.
“We did not get here overnight,” he said.
“We got here step by step, year after year, every year in an independent Bahamas without exception. This is a sobering reality.
“And so we have a sovereign debt crisis.”
Sands noted that while some would say the rapid deterioration between 2019 and 2021 was not predictable and others would say it was avoidable, the challenges over the two years highlighted the structural weaknesses of the economy that was collectively created over the last 50 years.
“This year when we pass this budget, it has to be never again”, he added.
“If we survive this, and we will, we must make the adjustments needed.
“We cannot simply kick this reform down the road.”
The former health minister said fundamental reforms must be implemented moving forward and further outlined several actions and recommendations the government should take, including some “belt-tightening”.
“Let us reassess the tax structure of the Bahamas to meet the annual funding needs of the government,” he said.
“If it requires income tax, let’s do it, do it voluntarily, before somebody else makes us do it.
“Clearly, our tax system is inefficient and predicated on best-case scenarios.
“Clearly, we are underperforming relative to best practices.”
Sands added: “As painful politically as a national, holistic ‘come to Jesus moment’ may be, sugar coating our current situation is not an ideal approach”.
