THE implementation of VAT is vital to the country’s long term strategy to reduce borrowing levels and prevent the devaluation of the Bahamian dollar, Financial Secretary John Rolle told some 150 managers of the National Insurance Board at a recent meeting.

Mr Rolle said that VAT’s implementation, coupled with budget reduction and a slowdown in government spending, could greatly improve the country’s financial outlook.

“VAT will ease the collection of government revenue and simplify our tax system. It will go a long way in giving the country that $500 million turnaround we are looking for,” he said.

However, Mr Rolle admitted that VAT alone will not save the fiscal position of the country. He noted that tighter controls on government spending must be balanced with improved revenue performance from existing tax types, including customs duties, excise taxes, business licensing and real property tax.

“Then, gradually, we will see lower inflation plus added cost of living adjustments. What this represents is an investment in the Bahamian economy. So what we are doing is increasing our outlook for the economy,” he said.

Implementing VAT, Mr Rolle said, is an essential step in modernizing the country’s tax system and offering a more equitable form of taxation.