By RASHAD ROLLE

Tribune Senior Reporter

rrolle@tribunemedia.net

FORMER State Minister for Finance Kwasi Thompson said the Davis administration will be hurting the most vulnerable people in society when it reintroduces value added tax on breadbasket items.

Prime Minister Philip “Brave” Davis announced in the House of Assembly yesterday that while his administration will reduce VAT to ten percent across the board, it will also increase the VAT rate to ten percent on a variety of items that had been zero-rated under the Minnis administration. Exceptions to this policy include VAT exemption for electricity bills and special economic zones. However, the policy shift means VAT will return to such items as baby food, bread, butter, grits, rice, soap, corned beef and various medications.

Mr Davis noted that experts have long said the government should strive to keep the VAT rate as broad as possible and exempt few, if any, items from the tax. This, experts say, would help the government keep the overall rate as low as possible while maximising returns.

Despite this, Mr Thompson said: “We (the former administration) wanted to ensure that we used the zero-rated process to assist those persons who are most vulnerable. We made a deliberate decision to take away VAT from bread-basket items, to reduce the cost of food for those most vulnerable.

“What (this) government again, and that’s why I said (they are delivering) half-truths, what they have said is they will decrease VAT, but what they have not said is that for all of those items that were previously zero-rated, it will actually increase by ten percent and so the cost of food will go up and the cost of all of those other items that were previously zero-rated will go up by ten percent.

“That was nowhere near included in any statement previously or today. What are all those items that were previously zero-rated that will now be ten percent? How will that affect the lives of Bahamians, that they will actually be paying more for certain things? We call upon the government to come clean, tell the whole story. We will not just listen to what they say, but we will watch what they do and that’s the important issue the country is interested in.”

In opposition, the Progressive Liberal Party said it would reduce VAT to ten percent for one year, then reevaluate the situation.

Mr Thompson said yesterday: “How long will this VAT reduction last and if this VAT reduction will only last for one year as they previously said, then it means that the reduction will only be for one year but the increase will be for more than one year and may even be permanent. We again say to the government, come clean. Tell the whole story to the Bahamian people.”