Author: Nassau Institute

New Directions in Bahamian Economic Policy: Recommendations for Tax Reform in The Bahamas

Rabushka: 16 October 2001 Dr. Alvin Rabushka Speech delivered to The Rotary Club of Nassau, Bahamas, May 13, 1997. Distinguished Rotarians and Invited Guests, It is said that "death and taxes are inevitable." The difference is that death occurs but once, while taxes are a daily affliction. Today, tomorrow, next week, and next month you will pay one or more of the following taxes: company fees and registration, motor vehicle tax, departure tax, import tax, stamp tax, export tax, property tax, payroll tax, and a raft of fees and charges. The import tax, which generates 63% of tax revenue and 57% of combined tax and non-tax revenue, is especially onerous. It shows up in the price of virtually everything you buy, whether directly in imported goods or indirectly in locally-produced goods that use imported materials (unless you live in Freeport). Make no mistake about it: The import tax is a massive sales tax that hits low-income Bahamians especially hard. If "death and taxes are inevitable," then new and higher taxes are equally inevitable. The coming years will see a higher ceiling on payroll taxes for the National Insurance Board, a new tax for a contributory unemployment insurance scheme, and yet another new tax for catastrophic health insurance. Despite what you may regard as heavy taxation in The Bahamas, by world standards your islands are both a "low tax" jurisdiction...

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Mr. Branville McCartney and his populist idea for government funded entrepreneurs

The press quotes Mr. Branville McCartney’s speech in Parliament: “There are a dozen businesses that I could name today, that with a bit of encouragement and start-up financing could benefit from revitalization.” Perhaps he means well in suggesting government funding for private enterprise, but Mr. McCartney’s wisdom is questionable when government has failed to give a full accounting for existing government financed Venture Capital programs. Government has no money, only what it takes from tax payers who have the right to know how it is being utilized. The PLP “Venture Fund” allocating $2 Million dollars in loans to start up a business is a typical example of Mr. McCartney’s “dream” program.Then there is the $1.7 Million FNM program for the youth start up business. The money is allocated, eventually distributed and the success or failure of these programs never reported to the public. After all, the money is forcibly taken and the public has a legitimate interest in knowing who received it, what they did with it and how it has benefited the general welfare. The above two programs total $3.7 Million of unaccounted money in less than five years. They are only two of numerous others that have been initiated on the same misguided notion that when enough money is made available a viable enterprise is born and everyone benefits. Popularity is the essence of politics and individual...

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On The Bahamas’ “Flawed Tax System”: Are Bahamian’s Under Taxed?

Despite the protestations of many economists that our tax system is flawed, I’ve continued to believe that it is what has kept government spending and debt in check, relatively speaking, over the years. Well, it seems I’ve been proven wrong. I know you can’t believe I said that, but I did. You knew one or more buts was coming didn’t you? But, I still think it should have restrained the borrowing and spending. We’re now told our taxes/revenue as a percentage of GDP is only 19%, so in the scheme of things we’re under taxed compared to other nations. But, (there’s another one) wait a minute, our GDP has grown substantially over the years, so shouldn’t government revenue have done the same? If you answered yes, go to the head of the class, because it did. From 2003 through 2008 government revenues totalled $7 billion. But, (one more) guess what, they spent over $8 billion. Not to mention the additional borrowing that took place. So as the debate turns toward changing the tax regime (read higher taxes) again, because, we’ll be told, import tax is not enough to maintain the country, remember those numbers, and maybe get updated ones through 2010. But (yes, another one) wait a minute. Isn’t our GDP declining as a result of the economic turmoil? If so, shouldn’t our taxes/revenue as a percentage of that...

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Bahamas Government Refuses to Legalize Numbers

The Cabinet Office today announced that after consultation with a wide range of community leaders and other citizens including leaders of the church, the Government has decided not to proceed with the legalization of the numbers business at this time. The consultation clearly showed that there is presently not a national consensus on this matter and that, in fact, there are strong feelings on both sides of the issue. Neither is it partisan as supporters of both political parties represented in parliament hold opposing views. Also, the consultation revealed that even within most religious denominations there are divergent views. There are pressing national challenges that require the focussed and united attention of government, church and the nation as a whole at this time, particularly violent crime and an economy battered by the global recession. The Government has therefore concluded that it would not be in the national interest to proceed with the legalization of the numbers business at this time. However, the Government proposes that a referendum should be held on the issue after the next general election so that the will of the people on this issue can be...

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Can the PLP Become the Next Government of The Bahamas?

A terrible economy. A public debt that is reaching a tipping point. Crime seems out of control. Rising unemployment. An educational system that is failing our children. What else? So the time seems right for a change of government. It’s a perfect opportunity for the PLP to show the country that they are capable of turning this boat around. But what do we hear from them? The ideas offered up to help grow the economy and get government spending and borrowing under control are simply underwhelming. Things like; Stafford Sands picture shouldn’t go on the $10 bill, stopping the deal on the new public/private port and the FNM are doing badly. Or people are hurting and government policy does not empower Bahamians. We even get comments like the Prime Minister is past his time. Even your not so humble writer can coin cute phrases about government policies and even the politicians themselves, but these times require leadership, not simply moaning. Mr. Christie and the rest of the PLP troupe need to stand in Parliament and the Senate every time they have the floor and not only criticise the FNM, but offer public policy ideas to show the country they have the capacity to lead it out of this mess. How about some details on how you will fix education, stop crime, grow the economy, reduce government debt and spending?...

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