EDITOR, The Tribune.

WHAT is the Laffer curve? The tax rates and the amount of taxes collected by government, and the impact it has on the economy.

There is a certain peak in which the tax rate can be at a sustainable rate to help to balance an economy, then there is a breaking point in which the tax rate can force sales to decrease rapidly and in some areas all together.

The Bahamas is at that peak, unfortunately, their so-called advisors/economist speaking to the nation’s leaders past and present are unfortunately giving them the wrong advice.

Because we have a kraken government system, past and present, that promotes a lot of socialism and places us at the mercy of what is known as - public choice theory (where people in this case, politicians) know something isn’t good for the economy and has certain ramifications, yet the politicians still do it because they care about their personal interest over the electorate’s interest who hired them to serve).

Because the size of government and their social practices, alongside the nepotism, lobbyism and cronyism, the government must find money to appease their demographic of people who fit one or more than one of the categories above.

Therefore, they have no money of their own so they have to come to the people with, direct taxes and many indirect taxes, which is compounding to far exceed the revenue they have set out to collect, this is why each time you would hear them say they did better than they set out to do with the tax rates.

Now let’s see what are the ramifications of these actions taken and how it creates the Laffer curve effect, despite them painting a pretty picture and using their voodoo economics and then distorting the facts of the real outcome.

The taxes coming from different angles which create high inflation possibly can lead to stagflation, (high unemployment plus high inflation) but overall the ramifications of Laffer curve which is also because of this tax rate, causes the government to collect more money at the expense of causing the people to be in a position to shop less, until there’s no money in circulation to shop at all.

The United Kingdom experienced this in the 1970s, as there’s something called public choice theory (where decisions are made knowing it looks good to the people, but will have a negative outcome eventually, but for self-serving purposes its applied anyway) was conspicuous as the politicians used socialism, nepotism, lobbyism and cronyism as a means to try and secure their seats as we always do here in the Bahamas.

The taxes were so high, stagflation was the order of the day and as the Laffer curve effect took place the government taxed themselves out of any possibility of collecting any tax revenue.

The bigger the government, the smaller the private sector became, instead of putting infrastructure in place and letting the markets work themselves out, the government felt they had to create jobs for the special interest people.

But when it’s time to pay these salaries, they went to the private sector and continued to extort them through taxes.

These actions led to great right sizing by the private sector to try and thrive in an economy on the death bed.

Because the government taxed the majority of businesses out of business and, therefore, there was no trickle economics, so most of the economy was economically dead.

The majority of businesses in the private sector had to close, because no money was in circulation, the people no longer had money to spend and the businesses couldn’t beat inflation.

United Kingdom was known as the welfare state, until God raised up one Margaret Thatcher, she had the brains to read up on some of the greatest economists who ever lived.

We are at that peak with taxes and if not met immediately with real solutions to conquer this pending destruction, we are heading towards what United Kingdom was in the 70s.

It mayn’t seem so, because our government is bragging about what they’re collecting, there are unintended consequences, I say to them don’t be like the dog with the bone that lost his bone because of greed.

Relieve the economy of all these taxes to accommodate special interest people and allowing the majority to suffer for your minority.

BAHAMIAN TYCOON

Nassau,

December 20, 2023