Ferguson predicts major tax hikes, says govt has ‘no choice’

The government has no choice but to implement “major tax increases” during the next budget cycle, President of CFAL Anthony Ferguson said, adding that he would be surprised if the government does not increase the value-added tax (VAT) rate.

In its recently released Article IV staff report, the International Monetary Fund (IMF) urged the government to announce a credible medium-term tax policy.

Ferguson said moving into the next fiscal year, he believes all taxes will be on the table for consideration.

“I think you’re going to see major tax increases by the government in the next budget cycle. They really have no choice in the matter. What I would caution government on is that the taxes should be targeted with priority programs, so that we the people can see where our monies are going and that it has the impact of helping those who are less fortunate and not overburdening the companies that will have to pay this, so that they don’t have to think about downsizing even further,” he said while appearing on the first episode of the new Guardian Radio talk show “CFAL Talks”.

“The thing about taxes is once the government gets its hands on it they will continue to tax. When value-added tax was initially contemplated, it was also contemplated we would do away with customs duty. But of course we continue to have customs duty, we continue to have value-added tax. We’ve increased it and I wouldn’t be surprised if the government doesn’t increase VAT even further.”

Ferguson continued, “I believe all taxes are on the table. I think you can see corporate tax, I think you can see personal income tax. I don’t think Bahamians have a problem paying taxes. I think they have a problem paying taxes that are going into what we call a black hole and we’re not seeing the country develop and see where our taxes are going.”

Minister of State for Finance Senator Kwasi Thompson on Sunday said despite the recommendation from the IMF to implement income tax, the government has no intention of implementing that kind of tax and the government is looking beyond tax to strengthen the country’s weakened economic system.

Coming off the unprecedented year of 2020, which saw the economy plummet because of the COVID-19 pandemic and the policies implemented by the government to stop the spread of the virus, Ferguson said he believes the theme for 2021 will be austerity in the private sector and hopefully for the government.

“Austerity will continue to be a mantra. I think companies in 2020 kept staff on. I think in 2021 a number of companies will look at their financial position and decide to reduce their staff, not furlough and I think you’ve seen in the press recently where some companies have started that process,” he said.

Criticizing the government for not taking a firmer stance on employee expenditure, Ferguson continued, “I understand the social aspect, having a heart and soul position with not reducing person’s salaries in government, but at the end of the day private companies had to make some tough decisions. For example, and I’m not choosing this out of any malice, but Bahamasair had no flights. When you think about it, those persons could not do anything sitting at home, but yet we continued to pay their full salary. So I believe the government should have considered seriously reducing salaries by 10-15 percent, so that we’re all in this together.”

The Combined Six Months Fiscal Snapshot and Budget Performance Report, released on Sunday, revealed that government revenue collections were down 44 percent, the deficit was up 279 percent and the national debt stood at $9.34 billion.

Ferguson said the one good thing that has come out of the pandemic is the modernization of company operations.

“The one good thing out of this, if anything in 2020 and beyond, is we will see faster modernization of our payment system and working from home and productivity. I think one estimate is that we lose a couple million every year from just school pickup,” he said.

“Going forward, you would see increased productivity, more working from home, for those millennials more work-life balance. But I think the modernization of government and the private sector in terms of technology can be a significant improvement hopefully going forward.”

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source https://thenassauguardian.com/ferguson-predicts-major-tax-hikes-says-govt-has-no-choice/