Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
jerzy says...
1
On VAT 'less clean' to oversee than Customs duties
Posted 30 July 2013, 9:35 a.m. Suggest removal
jerzy says...
The questions that Bahamians need to ask are:
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
On Chamber chief ‘astounded’ by 4,000 VAT payers
Posted 30 July 2013, 9:32 a.m. Suggest removal
jerzy says...
The questions that Bahamians need to ask are:
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
On Barbados's lessons for the Bahamas over VAT
Posted 30 July 2013, 9:30 a.m. Suggest removal
jerzy says...
The questions that Bahamians need to ask are:
Given property tax, high duty rates etc. why is the revenue to GDP ration so low? It is less than 20%... the existing tax system seems to have an unusually poor performance.
Is there any benefit to the Bahamas from joining the WTO, trade liberalisation, or reduced duty rates? Wiill the increased tax on local production and service be detrimental to local business and open the door to cheaper imports etc. that will benefit from reduced tariffs?
Why is VAT being favoured over other tax measures? VAT is inherently complex, has significant compliance issues and high administrative cost on both the government and business side.
The improvements in efficiency that are attributed by economists to VAT are entirely as a result of "many stages of production or distribution". Tax is collected at each stage. If there are not many, or any, stages of production; most of the tax ends up being collected at the border (70%) leaving little to be collected domestically. In this case, it is not easy to justify the introduction of VAT since it broadly works as a more complex way to collect duty.
The only overiding reason to implement VAT over a duty model is trade liberalisation. In a country that imports almost everything and exports little; the benefits will not accrue domestically but benefit other countries that are trading partners.
It appears that VAT is being proposed principally because the IMF have recommended it. The IMF have made it clear that the introduction of VAT will open the way to addition public borrowing. The Bahamas has a very low dept to GDP level compared with other independent nations (although it is rising). It is questionable whether additional borrowing will improve the welfare of the Bahamas or damage the economy further.
The proposed introduction of VAT seems to be more to do with satisfying the policy goals of the IMF, World Bank and WTO than to benefit the economy of the Bahamas. It should only be introduced if it can be demonstrated that there will be clear economic benefits to the Bahamas.
On Low turnout to meeting over VAT implementation
Posted 30 July 2013, 9:26 a.m. Suggest removal