Once VAT becomes effective January 1, 2015 expect to see the an increase in mortgage delinquencies show up in the statistics during the latter half of 2015. Its simple economics 101, when government taxes are increased the supply and demand of goods and services in the private economy declines. Taxes are a non productive use of funds especially in a no growth economy like the Bahamas.

Bahamians at the margin (the poor) will need to decide between a mortgage payment and groceries. With the temptation of making it rich in the legalized numbers house always in the back of their minds, it is a recipe for additional misery.

You have a point. Finding credible professionals, sympathetic, controllable and who have paid all of their taxes maybe challenging. Maybe they can being back some retired persons to fill the roll.

I commend Minister Pinder's proactive approach to retain the business and jobs in the Bahamas. I trust that all the jobs can be saved.

However, large global institutions are challenged to justify operations in "small" Caribbean centers for many reasons:-

- too many small markets so economies of scale are difficult to achieve
- too many different and ever changing laws, regulations and compliance issues
- G20 tax compliance and money laundering concerns
- Facta compliance for retail bank accounts, cost prohibitive?
- flat to declining GDP in most caribbean countries, no engines of growth
- dramatically increasing bank license fees and general taxes (VAT in Bahamas)
- antiquated centralized parliamentary democracy models can't be adapted for the Information Age
- heavy loan losses in region due to most businesses being marginal to unprofitable
- legalization and proliferation of domestic gambling (numbers) businesses (Bahamas, Haiti, T&C, Bermuda etc.). International banks carefully assessing reputation all risks.
- high crime levels, no one feels safe
- high energy costs
- "D" national average creates staffing challenges
- lack of investment in technology, innovation in front end investment management products. Best done in Canada

Perhaps the VAT collected on electric bills can go to pay the workers. We Ned the lights on for Christmas.

Don't forget that an educated work force may reduce the numbers business.

When the time comes to pay gaming license fees, required capital contributions, compliance costs, audits, Gaming Board up front investigation costs, regularization of cross boarder copy right laws and and payment of back gaming taxes you will find that few will qualify or have the ready cash for licenses.

The question is will the administration have the moral authority to close down to close down the unlicensed houses seeing that the business is virtual in nature. The iconic "Numbers Man" will be back on the street, this time booking orders on his smat phone.

If only $152m of $735m of loans are OK then there is a gap of approx $600m. With Resolve Bahamas only taking $100m of BoB's books then that leaves a gap of $500m!

Someone needs to take a forward look at BoB's capital base to determine if the Bahamian public may need to inject further capital into the bank to secure depositors. National insurance can't do it alone as these monies are need for pension payments.

BoB risk is bringing drip feed to the public.

John are you sure VAT will be automatically pulled from your bank account by the government once your VAT returns are filed? That would be devastating.

I think you may have a point. Why else would they want such detailed banking information just to register for VAT?

Good point Oracle. I guess businesses who have the ability will get their money out before they give the government their bank account info.

I think businesses maybe too afraid to register due to the extremely intrusive level of banking information required. As I understand it the information required to register includes:

"Banking Information: Bank Name, Branch Location, Account Number, Account Type, and Credit Reference Letter.

Tax registrations in the US, Canada and the UK don't require banking details...hmm. Having reference to a leading businessman's unfortunate customs valuation "error" and subsequent leak and his related resignation as head of a leading trade organization, I hope that the bank information is kept strictly confidential. Especially for those that "protest too loudly".

Coupled with the accounting impossibility of implementing VAT inclusive inventory pricing and the level of theft levels against business the fear levels must be unbearable.

VAT will not work as you can't tax the national debt away nor can you cut government spending to the extent needed to reduce the debt. See storey below on Barbados. Barbados implemented VAT in 1997 at 15% and in the face of mounting debt increased it to 17.5% in 2010 and last year in a desperate attempt to stop the debt growth they cut the civil service by 3,000 persons. Now they are at the brink of default and are in need of an IMF bailout.

http://www.bloomberg.com/news/2014-10-1…

VAT will lead to lower business and consumer demand, lower government taxes, a slower economy, higher unemployment rates and growth in the unrecorded economy. As I chat casually to businesses they are considering cutting staff and outsourcing functions to make up for the VAT tax and to obtain VAT input credits.

Many small businesses are marginally unprofitable and don't even know how to keep financial records. What are they to do? The level of financial illiteracy is too high for VAT.

Economic growth will only occur through trade liberalization, privatization (not government partnerships), decentralization, laissez faire economics, education, healthcare and rehabilitation/opportunities for our people. However this is impossible to implement as there are too many special socio-economic-political interest benefiting from the status quo.