By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Progressive Liberal Party (PLP) yesterday unveiled a populist economic agenda that included a weekly $40 increase in the minimum wage and cutting VAT to 10 percent for at least one year.

Philip Davis and Chester Cooper, the Opposition's leader and deputy leader respectively, said they would return to the "road map" provided by the National Development Plan to underpin efforts to revive the economy from the devastation inflicted by COVID-19 and Hurricane Dorian if voted into office at the upcoming general election.

The Minnis administration, while adopting some of its elements, seemingly eased the Plan - known as Vision 2040 - to one side after taking the Government in 2017, but Mr Cooper yesterday argued that it remains "the sturdiest guide" to take The Bahamas where it needs to go.

He and Mr Davis, pledging that they will not implement new and/or increased taxes if elected, unveiled a series of tax, rent and mortgage relief promises as well as recommendations to increase the weekly minimum wage by 19 percent from the present $210 to $250.

Few to no details were provided on the cost of these proposals, and how they will be financed and where the money will come from. Some observers - as well as the PLP's FNM opponents - will likely brand the plan as designed merely to win votes via costly suggestions that the already cash-strapped Public Treasury will find it extremely difficult to support.

However, Mr Cooper argued that a Davis-led administration will "phase in a livable wage, so that everyone who works is able to live with dignity and in a way that is acceptable in a modern Bahamas".

"With so many people unemployed, those who are working have to support greater numbers of people. We will recommend to the National Tripartite Council that they move towards a minimum wage of $250 per week in the private sector," the PLP's deputy leader added.

The minimum wage has only seen one increase since it was first introduced in The Bahamas in 2002. That occurred under the last Christie administration in the aftermath of VAT's 20-15 introduction, and was designed to help offset the rise in living costs produced by the then-new tax.

However, the increase from $150 per week to $210 per week is understood to have been backed by rigorous analysis undertaken by the National Tripartite Council, the body responsible for addressing all labour-related matters, and others.

While any increase will doubtless be welcomed by minimum wage workers, its implementation in COVID-19's immediate aftermath represents a further burden for those many businesses struggling to survive. It would act as a marginal increase in labour costs that could disincentivise firms from hiring, a move that would especially impact younger workers, and even spark some to lay-off.

Acknowledging widespread fears that new and/or increased taxes are imminent to pay for the multi-billion dollar national debt increase sparked by Hurricane Dorian and COVID-19, Mr Cooper added: "Increasing the tax burden for ordinary Bahamians would be both immoral and terrible economic policy.

"We will instead reduce VAT to a rate of 10 percent, across the board, for 12 months. This is not a huge difference, but it will put consumers in a position to afford a little more of what they need to get by, which will help get the economy going again. The Government receipts are likely to increase, as more transactions will yield more VAT payments. We plan to re-assess this rate after a year."

This represents a potential move back towards the low-rate, broad-based 7.5 percent VAT that The Bahamas was praised for when the tax was first introduced in 2015. The rate was hiked 60 percent to 12 percent by the Minnis administration in the 2018-2019 Budget on the basis that it needed extra revenues to pay off $360m in unfunded arrears for which it said no monies have been allocated.

Multiple observers have recently urged the next administration to undertake a detailed analysis of whether the VAT rate can be lowered as part of a more wide-ranging tax assessment, and Mr Cooper yesterday indicated a PLP administration will oblige.

He added that the "shock" VAT rate increase "meant that people had less to spend, and therefore the Government earned less. The increase in VAT put the basics out of reach for many ordinary Bahamians. When consumption taxes are too burdensome, they have a negative effect on economic growth".

Mr Cooper said a PLP administration would also "revive" the Revenue Enhancement Unit (REU) to crack down on tax dodgers and cheats, and ensure compliance, adding that it had been collecting $30m per month before the Minnis government closed it down.

The latter argued that the Unit had been operating without any proper legal basis, which was why it closed it temporarily before restarting the initiative. Tribune Business files show the Unit, which was established in Hurricane Matthew's aftermath, had been collecting $15m per month.

Mr Cooper effectively pledged to continue the overflight fees and real property tax collection efforts that have transcended several administrations, and talked of having "the first opportunity to re-structure the national debt in 2024" although no details were given.

Promising to address the rise in homelessness post-COVID-19 via increased funding for rental assistance, he added: "Where landlords are relying on rent to pay mortgages, we will work with lenders to reschedule their payments to avoid defaults.

"We will work with banks to keep homeowners in their homes, delaying a portion of mortgage payments for qualifying individuals until the economic recovery is underway. Our main objective is to avoid allowing the crisis in homelessness to grow." No definition of "qualifying" individuals was provided.

Mr Davis, adding that the PLP is "betting on the Bahamian people" to assist the party's plan with entrepreneurial ventures, pledged to revive the so-called Domestic Investment Board - a body that many said introduced another level of bureaucracy - to aid local businesses. He also said tax breaks and subsidies for investors will be reformed.