If The Bahamas government cannot collect what is now owing ...how will it supervise and collect the taxes from Value Added Tax (VAT)?

Warning On Vat From Barbados

Tribune242 Editorial
Nassau, The Bahamas

OVER the weekend, Elcott Coleby, deputy director of Bahamas Information Services, sent a release to the press to announce the downgrade by Standard & Poor of Barbados’ financial rating – the second in four months. Barbados is listed in tenth place as one of the world’s most heavily indebted countries. From a rating of BB+ it has been dropped to BB-.

“The downgrade reflects the mounting external pressures associated with a persistent current account deficit and external financing challenges, as well as the ongoing high fiscal deficit largely because of a substantial fall in government revenues as a result of the weak economy,” the agency said.

“In reacting to the news,” according to the Barbados press release, the “former president of the Economic Society, Ryan Straughn, said the latest rating has not come as a surprise and suggested that the writing had been on the wall for some time since Government did not go ahead with the expenditure cuts announced by the Minister of Finance in the August 2013 Budget.”

But what interested us even more was Mr Coleby’s warning at the top of the Barbados release. “This,” wrote Mr Coleby, “is where the Bahamas could be headed if it fails to act — sooner than later. So far, the Bahamas government has successfully staved off another downgrade in 12 months — thanks to its fiscal consolidation plan. Barbados was not so lucky.”

Nor will the Bahamas be, if it does not get its reckless spending under control.

However, if this hint from NIB is a message from government to hasten the pace for the introduction of VAT, it should slow down and give the matter more thought. It’s a warning for caution. VAT was introduced in Barbados on January 1, 1997, at the standard rate of 15 per cent. However, Barbados took its time investigating and testing before it took the plunge. Nevertheless, after 16 years, VAT has obviously not been the perfect solution. Barbados still does not have its spending under control and the very event that VAT was meant to avoid has happened — another S&P downgrade. Although several Caribbean countries have VAT, it is interesting to note that Grenada experimented with it in 1980, but quickly abolished it. It would be interesting to know why.

On October 1st, the Barbados government – to bolster its failing domestic tourism – reduced the VAT rate on “hotel accommodation” to 7.5 per cent, extending it to the Direct Tourism Service, which had been 17.5 per cent.

It was noted in an article posted by “David” on August 25 that July 2013 recorded Barbados’ “lowest number of long stay visitor arrivals across the last 11 years in any same month.” The land-based arrivals for the same year in October and November was examined and it was discovered that “both again, alarmingly recorded their lowest comparable monthly figures for the past decade”.

In another article, which noted that Barbados, although it had “enjoyed good credit ratings in days of old because of bullish tourism and international business products,” no longer did so because of the general world picture.

It highlighted several problems that needed urgent attention in view of the international down grading. Bahamians should take note of at least one of them, because, with a few amendments here and there, it is a serious problem in the Bahamas.

“It is apparent,” said the Barbadian writer, “that a few of the statutory bodies have grown to be financial albatrosses around the necks of taxpayers. Barbadians know too well those statutory bodies which political parties ‘pad’ to guard party support. Now that money has dried up this strategy of protecting the party faithful has been exposed for what it is, an unsustainable practice. Deal with it!”

Here in the Bahamas after last year’s election Bahamians saw this in high gear as large sums were spent on clearing land in the name of Urban Renewal. It was claimed that it was part of a plan to clear bushy areas that attracted crime. There was a hue and cry when these “landscapers” went on the land turning areas into arid waste and even trespassing on private property. At the end of this unconscionable waste of public money, nature laughed in the face of the politicians and in a few months the bush, in which the criminals allegedly hid, returned — but the money had already been wasted.

Then there was the flushing out of certain areas of the civil service to make room for party faithful. It was claimed that the price paid for this was a return to inefficiency.

Of course, there is also the non-collection of taxes. The question being asked is if this government cannot collect what is now owing, how will it supervise and collect the taxes from VAT.

Of course, an item that is now of paramount concern to the public – especially in these tight economic times — is the cost of official travel by government ministers at public expense. Former National Security Minister Tommy Turnquest in a page 1 article today has urged Prime Minister Christie to give a financial accounting of his delegation’s trip to CHOGM in Sri Lanka, and the side trips to Rome and London. We shall comment on this in this column tomorrow.

However, the point that rankles Bahamians is government’s apparent reluctance to cut unnecessary spending. Bahamians resent having to be taxed to support the status quo. Unless government sets an example, Bahamians will grumble. This is the frequent complaint that we hear within the ranks of the unions.

November 25, 2013

Tribune 242 

Yes, The Bahamas is in a serious debt position ...but the present government has a nerve to ask the Bahamian people for more tax money ...to support the continuation of the manner in which our past taxes have been wasted

Government Must Be Held Accountable For Public Spending

Tribune 242 Editorial
Nassau, The Bahamas:



SINCE THIS government has come on the scene, it has stumbled from one sink hole into another. Nothing seems to be going right, because there is no planning, no co-ordination, and, as we have said before, each cabinet minister seems to have his own agenda and his own game plan.

Several months ago, when it was suggested that Prime Minister Perry Christie should reshuffle his cabinet, he is quoted as having said words to the effect that the timing was not right as there were cabinet members who had agendas that they wanted to complete. If there were cohesion in the Christie government, the only agenda to be completed would be government’s agenda, and anyone not at one with that agenda would be shuffled out. This goes to the very core of what is wrong with this administration. There is no strong leader who can keep his colleagues following the same road map.

They don’t even seem to speak the same language. For example, with all the negative feedback, Mr Christie seems open to the idea of exploring new avenues to raise taxes, provided businessmen can suggest alternatives to VAT. Despite this, State Minister of Finance Michael Halkitis has said that there are no plans to postpone the July 1, 2014, date for the implementation of VAT. If there are no plans, then why should the Prime Minister ask for suggestions to find a new, less complicated way to raise taxes and drop VAT?

About the only subject on everyone’s lips today is VAT. And the more government spokesmen try to explain it the muddier the waters become. As a matter of fact, these spokespersons don’t seem to fully understand it themselves, leaving Bahamians at the end of their question-and-answer sessions more perplexed and less confident than before. As a result, public anger and confusion has grown. Grown to the point that at the end of the day the country might see a vocal group of young people ban together to hold government’s toes to the fire.

The Insight feature in today’s Tribune is a speech given by a young mother, who is also a branch manager of a local bank.

Tamara van Breugel, because of the lack of information coming from government, went on her own journey of education and was alarmed by what she discovered. Along the way, she also found many intelligent, like-minded young Bahamians who want to turn a new leaf in our history books and build a new Bahamas. They are fed up with the underhanded shenanigans that have been going on for far too long among what old Bahamians used to call their “representers”. So our readers should be on the watch for Citizens for a Better Bahamas. We predict that Mrs van Breugel’s speech is the launch of a vocal, enthusiastic and, we hope, more responsible Bahamian.

As we have said in this column before, for a government promising 10,000 jobs almost as soon as it became the government, the suggestion of VAT was suicidal. True, government has to get itself out of debt not only to prevent its credit rating from being downgraded, but to become a member of the World Trade Organisation (WHO). Among the many rules and regulations that have to be followed is that government will have to drop its tariffs on imported goods so that the goods of WHO members can enter the country more easily. This means that government will have to find a substitute to the present Customs duties. However, it does not mean that VAT is the answer. If government can’t police the collection of Customs duties now, it will never be able to afford enough inspectors to supervise VAT. A simple sales tax would seem the more sensible route.

Today, we publish a letter from a concerned Bahamian who vowed he would refuse to open his books to any government inspector, until government opened “their” books for public inspection. He was on the right path, but he made one mistake. Government’s books are not “their” books. These books belong to every taxpaying Bahamian. We have a right to know how our money is being spent. We have a right to demand that those books be opened for inspection.

This government started immediately on its grand shuffle among government employees, moving competent persons from their jobs, and replacing them with less competent party supporters. Not only does that create a state of inefficiency in a department, but it is a costly exercise. The clearing of land in the so-called Urban Renewal project was a scandalous waste of public funds. The money used was public money — our money — and we, the people have a right to know. Not only did workers trespass on private property, but the money handed out, regardless of the work to be done, warrants a public inquiry. A government representative is duty bound to prudently administer public funds — administer it as if it were his own. None of that prudence was shown in the Urban Renewal land clearance plan, for example — it was just pay-back election time. The public should demand an accounting of this scandal.

During this belt-tightening time, all of these overseas trips should he scaled down. Certainly, the public has a right to know the cost of every one of them, right down to the last glass of champagne. Remember, this is the public’s money that is being so liberally spent – while the public debt steadily rises.

Mrs van Breugel points out that in the auditor general’s 2010/2011 report, he discovered that:

• 5,980 cargo manifests had not been presented to Bahamas Customs for clearance;

• $95 million in real property taxes went uncollected, taking the total sum outstanding to $541.886 million;

• $302,866 of unpaid fuel from The Ministry of Works.

In the 2014/2015 fiscal budget, subsidies have been allocated as follows:

• $20 million to subsidise Bahamasair;

• $20 million in subsidies to Water and Sewerage;

• $7 million to the Bahamas Broadcasting Corporation.

And so the horror story of how the people’s money is being misspent continues.

Our finances would not be in such a sorry state if we had better managers in charge, and a government that did not believe that it can play Santa Claus with other people’s money.

Yes, the Bahamas is in a serious debt position, but this government has a nerve to ask the Bahamian people for more tax money to support the continuation of the manner in which our past taxes have been wasted.

November 18, 2013

Tribune 242 

Bahamas Blog International

Greece in the Mediterranean, like Haiti in the Caribbean, needs to start creating a new generation of citizens who accept the concept that duty is the reverse side of privilege... ...The nation will move forward when each citizen does his part, in paying taxes, in volunteering for the common good, and forsaking the vain desire of spending what you do not have...

Haiti, the Greece of the Caribbean

By Jean H Charles


St Lucia dubbed herself the Helen of the Caribbean.   Helen was that goddess of Greek mythology, daughter of the god Zeus and the goddess Leda.  She was so beautiful that she had hundreds of suitors, including king and princes.  Wedded to Menelaus, prince Paris of Sparta abducted Helena, causing the mythical Trojan War.

Because of the beauty of the land and the charm of its people, St Lucia was abducted by France and England successively some forty times, justifying the legendary surname of Helen.

Haiti’s connection with Greece has more to do with modern Greece than with Ancient Greece.   I was inspired by two recent columns in the New York Times to draw the comparison between Haiti and the debacle happening these days in Greece.

Russell Shorto in a New York Times Magazine essay: The way the Greesk live now laid down the underpinnings of the economic setback that caused social disruption in Greek society.

It all started with the legacy of the culture adopted during the Ottoman Empire.   Greece, abducted by the Arabs, tried to defend herself the way she knew best.   To fight the distant ruling of the Caliphate against paying taxes, the Greeks adopted the concept of fakelaki (little envelopes) for bribery or looking the other way.

The culture of faking the sentiment of patriotism according to Aris Hadjigeorgiou (a Greek writer) is now ingrained in insidious ways where upper echelons of Greek media intertwined with the political structure prevented reporting of financial mismanagement that may cloud any hope for resolving the crisis.

In business as in politics, mismanagement leads to debacle.   In such a situation, still citing Aris, the people who can, angle for escape routes abroad and the peasants flee to the cities.

National political leadership is at a low web.   The Greeks keep talking about Sarkozy, Merkel and Obama as the guiding lights to get them out of their mess.   Yet Greece was the mother of democracy where, before Christ the concept of collegiality, hospitality and patriotic instinct was the norm in the res-republica.

Patriotism or the lack thereof is not only the province of the Greek boundaries.  An article in the New York Times 1 March edition described how some Russian immigrants who settled themselves in the Brighton Beach section of Brooklyn have organized themselves to bilk successively the health system, the housing industry and the insurance business.   (Who says the communist system produce good citizens?)

According to a senior law officer prosecuting the case, “The Russian mind set is: if you are not scamming the government, you are not doing what you are supposed to be doing, you are looked upon as a patsy.”   The Soviet system helped to groom a generation of post Soviet criminals in the United States with a culture that breeds disdain for the rules and a willingness to cheat to get around them.

Transporting ourselves into the Caribbean, we find the same scenario in Haiti, the motherland of nation-building.

There is a huge discrepancy between the concept of liberty, equality and fraternity enshrined in the Haitian flag and the reality on the ground.

Jean Pierre Boyer, the third president of Haiti, introduced a rural code in article 19 and 20th that prevented any store to operate wholesale or retail in any of the rural counties of the country, as such blocking national commerce in the hinterland.

While it is not the law of the land today, it is still the practice.   The majority of the people who live in the rural areas are regarded as marginal citizens who can be exploited on a whim.   Boyer, who agreed to pay to France the indemnity debt of 15 million francs, laid upon the peasants and the Dominican territory, then part of Haiti, the tax earmarked to pay the ransom.  The Dominicans rebelled, leading to their independence on February 27 1844.

The Haitian peasants are still under the yoke of that political, economic and social discrimination, which explains why Haiti is so poor.

The rest of the population, akin to the Greeks, develops a fake patriotism culture that makes the country an easy prey for foreign meddling.   Successively, the French, the Germans and the Americans, through usury loans to satisfy the debt, contributed to exacerbating the contradictions that nourish unpatriotic sentiments in Haiti.  The Haitian governments were almost without exception predatory governments that used state resources to either remain in power or to terrorize their own population.

The promotion of common good, the very essence of government, is replaced by the naked search for individual interest and advantages.   This practice vitiates even the altruistic motivation.   The non-profit organizations, national and international, established in the country found it easy to engage in the fake service mode, compounding the misery of the population.   The United Nations, with its gargantuan scheme, the MINUSTHA, is one of the biggest culprits.   Haiti, under the guise of prime war assignment, is one of the most coveted foreign posts.

The perversion of the term of democracy is pervasive.   From the former president Rene Preval, who prescribed the doctrine of each for thyself to the present legislature that puts roadblock at each step of the executive because entrenched interests have not been satisfied, we have a country that keeps failing to become a nation.

Greece in the Mediterranean, like Haiti in the Caribbean, needs to start creating a new generation of citizens who accept the concept that duty is the reverse side of privilege.   The nation will move forward when each citizen does his part, in paying taxes, in volunteering for the common good, and forsaking the vain desire of spending what you do not have.   It was Abraham Lincoln who promoted the notion that a nation is the aggregate sum of moral citizens working for the common good, providing individual satisfaction for each one.

To conclude, I would like to share this poem posted on the web by the prolific Haitian poet-attorney, Serge H Moise:

These loudmouths
They always know what to do
And once at the helm of affairs
One never sees them hone
What they say they wanted to redo
They grow like leopards
Yet these are just the loudmouths
And once the situation is confused
They meet every empty handed
They can be heard on FM signal
Play to flaunt
They are also at Ramasse
Where the same hackneyed
Verbiage is
As for those in the Diaspora
They do not care that they will
Praising exuberantly all skills
Unable to imitate their bosses
Militating in action and advance their holes
They are intoxicated with their megalomania
They are available as saviors
Always turn out cheaters
And when the situation is confused
They meet every empty handed
With their air of buffoons
Attitudes of cowards
Those who treat us to con
Seem to be right
Despite these claims
Devoid of convictions
The small republic back
Curling up on the ridiculous

March 6, 2012

caribbeannewsnow

Bahamas Prime Minister Hubert Ingraham: Minuscule tax benefit from huge bank profits

By KRYSTEL ROLLE ~ Guardian Staff Reporter ~ krystel@nasguard.com:

Prime Minister Hubert Ingraham yesterday expressed concern that some of the banks in The Bahamas are able to take large profits out of the country while paying very little taxes.

"I find it very distasteful, and I am very annoyed by it quite frankly, angered would be a better word, that some of the banks in The Bahamas are able to repatriate huge profits from The Bahamas and pay minuscule sums," Ingraham said during debate in the House of Assembly yesterday on a bill to amend the Criminal Justice International Co-operation Act in the House of Assembly on Thursday. The bill, which was passed yesterday, seeks to allow The Bahamas to provide assistance to foreign jurisdictions on fiscal criminal tax matters.

"And if there was a (corporation) tax on banks in The Bahamas, a low tax of ten percent or five percent, then they'd be able to deduct that amount from the tax that they'd pay back in Canada or elsewhere, they'd pay it anyhow and leave the money here," Ingraham said.

He added that the government does not have a problem entering into double taxation agreements.

Those agreements are designed to protect against the risk of an individual or a corporate entity being taxed twice where the same income is taxable in two states.

However, he said the Bahamian tax system is not as broad as countries such as Barbados to take account of various things that are normally taxed in that country.

"Banks in The Bahamas are able to make profits here in this country, [and] send it to their operations in Barbados. Barbados gets its share of taxes, then they pay their home country and we get pittances," he said.

In addition to the Criminal Justice International Co-operation Act, three other bills were passed yesterday.

The House of Assembly also passed a bill to amend the Magistrates Act, which seeks to amend the definition of "circuit justice" in section 2 of the act.

The Merchant Shipping Oil Pollution Amendment Bill was also passed. It seeks to regularize the shipping industry.

Finally, the Bill to Amend the Registrar General Act, which seeks to increase the number of assistant registrar generals under the act, was passed. It also seeks to repeal a section of the act to remove the provision for the registrar general to be a magistrate, ex officio.


October 16, 2009

thenassauguardian

Bahamas Caribbean Blog International