Value-added tax (VAT) will be decreased from 12 percent to 10 percent no later than January 1, 2022, Prime Minister Philip Brave Davis announced yesterday.
“It should’ve been laid this morning but the drafters haven’t gotten it to me,” Davis said, referring to the amendment to the VAT Act.
“It will be coming. By next week, it will be laid.”
When pressed on a specific timeline, he replied, “We’re still working those modules out. The latest will be January 1 because we need time for businesses to recalculate their systems.”
In a communication in Parliament yesterday, the prime minister said the reduction in VAT will help Bahamians and the economy.
“And the reduction is being managed in a way that is fiscally responsible,” he said.
“The Ministry of Finance team has worked long hours, along with some of the brightest minds at the University of The Bahamas and the government and public policy institute, as well as with international consultants, to perform extensive modeling and financial analysis to ensure that the VAT reduction does not adversely affect our fiscal position.
“With the reduction in the VAT rate, we are eliminating the zero-rating under VAT on a variety of items. Price controls are in place to ensure breadbasket items will be fairly priced.
“The VAT exemption for electricity bills and the special economic zones are untouched.”
In the Davis administration’s supplemental budget, which was tabled yesterday, it forecasted an $80.5 million increase in VAT revenue this fiscal year.
A reduction in VAT was among Davis’ key promises while on the campaign trail.
The tax was originally introduced at 7.5 percent by the Christie administration — under which Davis served as deputy prime minister — in 2015.
It was increased to the current 12 percent by the Minnis administration in 2018.
While in office, the Minnis administration also eliminated VAT on breadbasket items, medical insurance, various medication and prescription medication, tuition, electricity up to $300, water up to $50, among other things.
Office of the Prime Minister Press Secretary Clint Watson confirmed yesterday that VAT will apply to breadbasket items once it is reduced this year.
It is unclear if VAT will be applied to medication, medical insurance and water bills.
Davis said, “When VAT was first introduced in The Bahamas in January 2015, it was designed as a broad-based tax similar to the New Zealand model, deliberately simple in design and ease of administration with relatively few exemptions.
“The implementation of VAT in The Bahamas was efficient, and we were praised internationally for our very successful launch. In recent years, however, the country’s tax policy has moved far away from the original plan and intent. Indeed, through the actions of the previous administration, the VAT base has been eroded by the implementation of many classes and types of items being zero-rated.
“These changes were considered by experts to be ill-advised and poorly executed, who believe zero-rating schemes are an ineffective and inefficient way to provide relief to the vulnerable in society.
“Instead, there is a preference for targeted relief such as conditional cash transfer programs.
“My government is committed to increasing direct cash transfers to families who need the support with the reintroduction of the RISE program, about which you will hear in more detail from the minister of social services and urban development.
“Based on the modeling and analysis conducted by my team, we are confident that with the elimination of zero-rating categories, and the economic uplift to consumers, government revenues are protected.
“The model and the analysis of the results will be published on the government’s budget website. I requested that the modeling, with respect to the 2018 increase in VAT, also be published but I have been advised that it is conveniently no longer available.”
The post PM: VAT reduction by Jan. 2022 appeared first on The Nassau Guardian.
source https://thenassauguardian.com/pm-vat-reduction-by-jan-2022/
No comments:
Post a Comment