By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Prime Minister has denied that a committee created to help tackle The Bahamas’ cost of living crisis will merely be “a talking shop”.

Philip Davis KC, in announcing the National Trade Facilitation Committee during his address leading-off the 2024-2025 Budget debate, argued that “structural” problems are a key factor behind the high prices and living costs that Bahamians have had to endure both before and after the COVID-19 pandemic.

He added that the high cost of goods cannot simply be blamed on The Bahamas’ regressive, consumption-based tax system, led primarily by VAT and import tariffs, which act as a tax on the cost of living. Or the fact that this nation imports virtually all the goods that it consumes, thus leaving it vulnerable to inflation brought in from the outside world.

Mr Davis said that, since 2021, his administration has been introducing measures to lower the cost of living but, when compared to other countries with similar import volumes and tax rates, The Bahamas still “ranks poorly”.

He said: “There is a widespread, mistaken assumption that high costs here are due to the fact that we have such high imports, and that Customs duties and government taxes are the cause. This is not the entire story.

“If transportation costs and import taxes and duties are stripped out, the underlying price is still inexplicably high. When compared to other countries with similar imports and taxation arrangements, especially those in the region, we still rank poorly.

“Since our first Budget in 2021, we have introduced a number of measures designed to reduce the cost of living, but they have had little success in producing reductions in prices to the consumer. It is clear that something more structural is at play.”

Mr Davis said his administration is “attacking” the high cost of living through creating the National Trade Facilitation Committee, which will be tasked with increasing competition across supply chains and simplifying trade processes.

He said: “Our government is already attacking the problem of the high costs of living by looking at the challenge from a number of angles. One of the approaches is to reduce the high costs of trade by working through a body that will oversee our country’s overall trade environment.

“We have therefore established a National Trade Facilitation Committee (NTFC) that will co-ordinate all our efforts across the different agencies of our government. This includes the upgrade of the Potter’s Cay port, the digitisation of the trade ecosystem, streamlining and simplifying processes, and increasing competition across supply chains.”

Mr Davis added that the establishment of similar committees in other countries has helped them to reduce costs by up to one-third for the benefit of their citizens. He said: “The National Trade Facilitation Committee is not a talking shop. It is an internationally-recognised structure, one, in fact, which we ought to have set up previously under our existing international treaty obligations. 

“Evidence from the World Bank shows that the establishment of an NTFC has a big impact on reducing costs for ordinary people. In fact, countries which have implemented trade facilitation reforms can reduce costs by up to one-third.”