By EARYEL BOWLEG

Tribune Staff Reporter

ebowleg@tribunemedia.net

FORMER State Finance Minister Kwasi Thompson has again called on the government to remove VAT on bread basket items, this time after an International Monetary Fund report projected consumer prices in The Bahamas would increase by 7.3 percent this year.

Mr Thompson, East Grand Bahama MP, said the report recommended that governments around the world take action to mitigate the effects of inflation.

“It also spoke to governments ensuring that they have fiscal restraint and fiscal responsibility because we are unsure and they are unsure, one, how high inflation will get and also how long inflation will last.

“Their fear is that it will get worse and their fear (is) it will get worse quickly and so we are calling upon the government to act. They have been consulting but we are calling upon them to act,” he told reporters yesterday.

The IMF World Economic Outlook report noted that global economic prospects have worsened since its last forecast in January, due to the ongoing war in Ukraine.

Mr Thompson also said: “The IMF report specifically said that governments should take action to mitigate effects and at present we are not seeing those mitigating effects or we are not seeing those mitigating actions by this government.”

The former Cabinet minister said “one easy very quick thing” that can be done is removing the VAT off breadbasket items, stating that it will have an “immediate effect” on the prices that people pay for food.

The opposition Free National Movement has frequently criticised the Davis administration for removing the zero rating on bread basket items when it reduced VAT from 12 percent to 10 percent after the 2021 general election.

Social assistance was another aspect the East Grand Bahama MP highlighted as well.

“Another thing that needs to be done is we need to look at increasing social services assistance. We need to look at increasing social assistance for the (school) lunch programme. Those persons on the lunch programme and who have been paid on the lunch programme, they recognise that the monies that they were paid they will be able to buy less food with the money that they were paid. So we’re saying that they should increase the funding for school lunch programmes,” Mr Thompson said.

He also thinks the government should increase VAT back to 12 percent for wealthy people whose property transactions are above $2.

“The Fiscal Responsibility Council said that this was a fair thing to do. It would provide equity because it would be the rich who would (be) paying more and those funds that (are collected) you can then put that back into the economy and you can then provide the assistance needed,” Mr Thompson said.