United Democratic Party (UDP) leader and Marco City MP Greg Moss said The Bahamas is not a tax-free jurisdiction at all, but instead one of the most heavily taxed in the world. He also told Guardian Business that agreements such as the tax information exchange agreements (TIEAs) being signed by The Bahamas are merely smoke screens for other jurisdictions looking for "missing tax dollars".
Moss spoke with Guardian Business about the matter of taxes and economic stagnation.

High tax jurisdiction
"The Bahamas is not a tax-free jurisdiction. The Bahamas is one of the most heavily taxed jurisdictions in the world. It's just that our taxes are indirect more than direct...consumption taxes, rather than taxes on wealth, with the result that the tax burden is carried by the persons who are least able to afford it in our country.

"That is inequitable. That is contrary to every egalitarian concept, but more than that, that's now bad business," Moss said.

He cited the recent European Community blacklisting of many Caribbean states including The Bahamas. At the time, Financial Services Minister Hope Strachan confessed to not understanding the reason for the blacklisting, given that the Organization for Economic Cooperation and Development (OECD) has continuously asserted The Bahamas' compliance.

"She was fundamentally missing the point," Moss said.

The point, according to the newly-minted UDP leader, was the European Community's assertion that it is interested not only in illicit funds and funds coming from drugs, but also in tax dollars. He said the Europeans appear to have long felt that the region is unfairly competing because of a no tax regime.

"What this takes us back to, long ways back, is to what the OECD originally said. When they first manifested their presence they came out against unfair tax competition and what we saw is over the last roughly decade and a half, everything else has been a smoke screen to get these agreements signed - these TIEAs and so on - ostensibly for the purpose of going after illicit funds, but really for the purpose of bringing some transparency to the onshore jurisdictions in order for them to go after what they perceive as missing tax dollars," Moss said.

"There is a competitive disadvantage now to offshore jurisdictions not taxing. There is a competitive advantage to taxing, but taxing at a more moderate rate, because that then becomes a question of sovereignty."

Poor monetary and fiscal policy
Meanwhile, Moss accused the Central Bank of an "anemic at best" approach to monetary policy, and both major political parties of "absolutely incompetent" fiscal policy, charging that fundamental tools available to boost the economy have not been used, or have not been used well.

According to Moss, the most obvious monetary tool is the interest rate.

"If you have a stagnant economy, you certainly want to drop the interest rate in order to make money more available and hopefully to promote the expansion of that economy. And they have failed to do that," he said.

Moss acknowledged the 50 basis-points reduction in the interest rate some years back, but said that was "nothing" compared to what the country needed.

"And while we saw the decline in our economy we also saw the increase in the debt burden of most persons, including the middle class: the debt burden on loans that are being written at prime plus, the debt burden on credit card loans - which could have been addressed by the Central Bank.

"And it all happens under this fiction that banks are really borrowing money from the Central Bank," he added. "But because of the glut of Bahamian dollars in our banking system, they have not had to access the Central Bank, and so they've been making obscene profits at the expense of the poor and the middle class.

"Whether you look at the anemic - at best - approach of the Central Bank to monetary policy or you look at the absolutely incompetent approach across party lines to fiscal policies - with this spend and spend, or tax and spend approach that we've seen in the last decades, it's no wonder why we are where we are."

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