NASSAU, BAHAMAS — Despite repeated calls from the International Monetary Fund (IMF) to broaden the country’s tax base with income taxation, the government is not contemplating the adoption of a personal income tax, according to Minster of State for Finance Kwasi Thompson.
Thompson, commenting on the IMF’s recent statement on the Article IV consultation, said: “We take our commitment to achieving fiscal sustainability seriously. Naturally, this includes considering a range of tax reforms to create a more broad-based, equitable system.
“The government has already committed to reviewing recommendations made by the Economic Recovery Committee (ERC) regarding the business license regime and real property tax; however, as has been stated before, the government is not contemplating the adoption of a personal income tax regime.”
Thompson added: “Beyond tax reform, our top focus is the immediate economic recovery as well as accelerating economic growth over the medium and long-term.
“In keeping with our articulated plans, we will do this by investing in small business development; building a robust entrepreneurial ecosystem; removing the impediments to the ease of doing business; stimulating growth in strategic new industries to support economic diversification; and driving the national digital transformation agenda and other structural reforms.
“We fully recognize that by focusing on accelerating economic recovery and pursuing robust economic growth, we can put the country on a trajectory to meet the additional demands caused by this period of economic dislocation without recourse to significant additional taxation.”
The IMF has noted that the government’s near-term priority is to “save lives and livelihoods”, adding that it is “appropriate” to postpone the achievement of the public debt target of 50 percent of GDP by another two years.
According to the IMF, public debt is expected to jump to almost 90 percent of GDP by 2021 and to remain more than 22 percentage points above its pre-pandemic level over the medium-term.