Dear Editor,
In a recent response to those in opposition to his government's proposed value-added tax (VAT), Prime Minister Perry Christie challenged them to come up with alternatives. As one who is opposed to VAT, I hereby offer my alternative to it (and to customs duties): income tax.
My position is based on the fact that VAT and customs duties are unfair forms of taxation because they are consumption taxes, and they place a disproportionately higher tax burden on the poor (who spend most of their income) than on the wealthy (who save most of theirs).
In my view, one of the most troubling aspects of the current taxation debate is that the prime minister and other key voices engaged in the debate are talking about the need for tax reform but the alternatives they are proposing (i.e., VAT, sales tax, etc.) are not true tax reform; they are tax charades because changing to them from customs duty is a game that would continue to place the bulk of the burden of taxation on the backs of the poor using different names.
In addition to missing the opportunity to truly reform our system of taxation by the introduction of a fair income tax (i.e., non-regressive and non-progressive) for all residents (Bahamian and non-Bahamian), the government is missing a strategic opportunity to reposition The Bahamas away from its expired "tax haven" status to a competitive low tax jurisdiction.
Imagine a Bahamas where customs duties are eliminated (except on policy items like tobacco, alcohol, motor vehicles, and petroleum products) and a flat tax of less than 10 percent is applied to personal income (excluding capital gains and investment income).
Imagine a Bahamas where our complex business license fees are replaced with a flat rate of tax of less than 15 percent on corporate profits (excluding capital gains, dividend payments, and foreign income not repatriated to The Bahamas).
Imagine the growth impetus this will bring about in attracting to The Bahamas both individuals and companies who are seeking low tax jurisdictions in which they can officially conduct legitimate business and manage wealth while benefitting from double taxation agreements that we would have the opportunity to enter into with countries around the world. And imagine what this would mean for all those involved in the international financial services sector.
And, finally, imagine a Bahamas being run by governments that exercise fiscal discipline, where with all the additional government revenue generated from true tax reform we begin to have prudent budget surpluses instead of obscene budget deficits.
No doubt, some will say I'm a dreamer - dreaming about fair taxation for all, rich and poor, resident and non-resident. In response, I borrow and adapt the words of John Lennon: "You may say I'm a dreamer, but I'm not the only one, and I hope someday you'll join us" and make The Bahamas a fairer place, at least in terms of taxation.
- Pastor Cedric Moss

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