Increase In Vat Or What?

• Author: Derence A. Rolle Davis
• Pages: 163-171

The Law: The Social and Economic Effect on The Bahamas 2000 - 2020

35. INCREASE IN VAT OR WHAT?

Usually in most homes one person is better at keeping the “books”, or

managing the budget, than another. Using the analogy of running a household /

country, what was discovered is a need to get a greater contribution from

members of the household to pay household expenses. Expenses for the country

includes roads, infrastructural development, light, water, airports, and the like.

The government sought to make provisions to collect a greater contribution from

the householders {citizens and visitors alike) by adding a new tax system called

Value Added Tax. Where is the Value? Where is the Added (factor or thing to

whom and to what? Why is there a tax? What is being multiplied and how is this

beneficial to me, the consumer?

VAT is a fancy word for sales tax. The government’s unpopular decision

to increase value-added tax from 7.5% to 12% in July 2018 has led to a view that

the people were duped when VAT was introduced in 2015 at the 7.5%.

Deputy Prime Minister, K. Peter Turnquest, said that the total debt owed

by The Bahamas was $7.52 billion dollars (US$). He said that the successive

governments have artificially under budgeted commitments and some vendors

were not paid.

Bain and Grant’s Town MP, Travis Robinson, Pineridge MP, Frederick

McAlpine, Reece Chipman, MP for Centerville, and Vaughn Miller, MP for

Golden Isles, also voted against the measure, a move that caused the public to

dub them the ‘Dissident Four’.

Since the introduction of VAT Bahamians are now made to pay tax to

deposit their own money on a bank account. This FNM government is the same

group that voted against VAT in 2015 when the then opposition leader Dr.

Hubert Minnis said that to implement VAT shows no forethought by the PLP,

and it was a double taxation.

Let us examine how this VAT tax works on the life of a person in The

Bahamas. Consider a business owner as a retailer, for example. He buys goods

that are imported. He pays for the goods and he pays customs duty and freight

with a VAT tax and stamp duty added to the cost of the good. The retailers sells

the good to a consumer. He has to mark (inventory value) the good up to the

price to make the money he spent on the good + the VAT + freight + stamp tax.

If he sold the goods for ten dollars ($10) he must now add 12% VAT on the cost

of the good, making the cost to the consumer in the sum of Eleven Dollars and

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