By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

PLEDGING to fulfil at least one part of a key campaign promise, Prime Minister Dr Hubert Minnis has said value added tax (VAT) will be removed from bread-basket items in the next budget cycle.

The policy shift was anticipated last year but its realisation was postponed because of the financial state of the country.

Dr Minnis announced the date for the policy’s implementation during a meeting of the Free National Movement’s (FNM) Englerston Constituency Association at the EP Roberts Primary School Monday night where he sought to sell his policies for Over-the-Hill communities.

“During our campaign we had said we will remove VAT off breadbasket items and that we will do, that will happen within the new budget,” Dr Minnis said.

The FNM also pledged before the May 2017 election to remove VAT from education fees, water and light bills, medicine, healthcare and insurance. It’s not clear if the government intends to live up to this part of its commitment in the next budget as well.

Asked yesterday, Deputy Prime Minister and Minister of Finance Peter Turnquest said: “We will announce our budget initiatives when we present the new budget in May.”

The administration’s promise to remove VAT from some items drew criticism from experts in financial sectors when Dr Minnis initially revealed the plan several years ago.

Gowon Bowe, president of the Bahamas Institute of Chartered Accountants (BICA), said last year such a policy would “not achieve its end goal” and he expressed hope the government would reconsider the pledge and listen to the advice of professionals instead.

“Taking VAT off those items doesn’t achieve the end goal because if you reduce the base you charge VAT on, it increases the cost of all other items on which you charge VAT,” Mr Bowe said.

The International Monetary Fund (IMF) has also criticised the exemptions plan. Following a visit to this country two years ago, the IMF said in a paper: “The authorities should resist pressures to weaken the VAT regime’s efficiency through the introduction of exemptions.”

Nonetheless, some Bahamians have been anxious for relief from VAT and often lament the administration’s failure to make good on its tax promises.

The government is already expected to declare some inner-city communities tax-free zones in the next budget, a move expected to have some impact on the revenue the country generates. A white paper on the plan is expected to be released in a few months. 

“We in the FNM will attack poverty aggressively and the underprivileged aggressively to ensure we uplift as many as possible,” Dr Minnis said Monday night.

He explained the tax-free zone policy will be rolled out in phases, affecting some inner-city constituencies later than others. He suggested Fox Hill and other constituencies with depressed areas could be impacted by the policy, not just Bain Town, Centreville, St Barnabas and Englerston. 

“We have phase one which would include Bain Town and Centreville; the western boundary would be Nassau Street, northern boundary would be Delancy Street, and southern boundary would be Wulff Road,” he said.

“Then we would move to phase two which would be St Barnabas and Englerston; so I don’t know how they could say I discriminating. St Barnabas is FNM and Englerston is PLP so they will both come in. Then we will look at other, what we call depressed areas, to extend (the tax-zone policy) in phase three, four, etc, so we’ll look at segments of Fox Hill that need assistance…”

As part of the tax-free zone, the FNM promised to free Over-the-Hill communities from business licence fees, real property tax, furniture tax, capital goods and taxes on business equipment while also giving them lower import duties for business vehicles.

On Monday night, Dr Minnis also urged residents of Englerston to support the FNM in the next general election. The constituency is the only one in New Providence which has a Progressive Liberal Party MP, Glenys Hanna Martin.