Speaking in the House of Assembly, the Rt. Hon. Perry G. Christie, Prime Minister and Minister of Finance, announced the launch of a new website, UnderstandingVAT.org, intended as a new resource for Bahamians.
“We believe it is the Government’s responsibility to explain as clearly as possible how the revenues that come into our government are utilized,” the Prime Minister told the House.
UnderstandingVAT.org, he said, would provide a place for Bahamians to find answers to their questions, and a place they could “see for themselves the details of the tax relief, the deficit reduction and the investments in our country that have all accompanied the introduction and implementation of VAT.”
In his communication to Parliament, the Prime Minister noted that when his government came to office in 2012, “we quickly discovered the extent to which our public finances had been allowed to deteriorate during the previous Administration’s mandate.”
The Prime Minister noted that in 2012, The Bahamas was spending $500 million a year more than it was taking in – not a sustainable path. He described the introduction of VAT and accompanying reforms as “a resounding success in producing the significant improvement in the revenue yield of our tax system that is vitally necessary to support sound and sustainable fiscal policies.”
The Prime Minister noted that VAT had been implemented only after “the widest public consultation” and “was introduced in an impressively smooth fashion”. Turning to the issue of transparency, the Prime Minister specified that “the Constitution of The Bahamas, the Financial Administration and Audit Act (FAAA) and various programme and revenue laws provide for the transparent accounting of all Government expenditure and the collection, accounting for and utilization of every dollar of revenue.”
In addition, he said, “the Government’s Budget provides an annual statement on detailed expenditure and revenue plans for the coming fiscal year, as well as data on actual outturns for both expenditure and revenue for recent prior years.”
The Prime Minister described how Article 128 of the nation’s Constitution required that “all revenues of the country are to be paid into the Consolidated Fund. As such, revenues from any one source are to be indistinguishable from revenue from any other source.” Thus, VAT revenues have contributed to and made possible three things: (1) tax relief, (2) deficit reduction, and (3) government expenditures.
The Prime Minister went on to list in detail the tax relief made possible by the introduction of VAT, including the elimination or reduction of more than 100 customs duties. This information is also available on the new website.
The Prime Minister explained how “the actions in the Government’s Medium-Term Fiscal Consolidation Plan, which included the new VAT, net of the other tax reductions and expenditure increases, have secured a reduction in the GFS Deficit of near $500 million. This means that $500 million of the VAT revenue went to deficit reduction.”
The Prime Minister described how VAT had allowed the Government to invest significantly “in areas such as national security, health, education and social services”, noting that since the implementation of VAT, the government had hired an additional 99 police officers, an additional 166 Defence Force officers, and employed 347 more teachers and education staff, as well as hiring 103 additional doctors and health professionals.
“These vital expenditures would not be possible without VAT revenue,” said the Prime Minister, “Nor would it be possible to service the debt associated with the acquisition of the vessels from the RBDF, at $25 million a year, or purchase a new immigration, border control and passport system at a combined cost of $33 million, of which $5.8 million was paid in this fiscal year. Nor would it have been possible to purchase a new Road Traffic system, at $8.3 million, of which $1.9 million has been paid off this fiscal year, and four new Doppler radars at $23 million, of which $7 million would be discharged this fiscal year.”
The Prime Minister concluded his Communication emphasizing that “Our citizens expect and rightfully deserve a full and clear accounting for the dollars in taxes that they pay to their Government each and every year.” He explained, “Every single dollar of revenue is fully accounted for each and every year and is subject to audit by the independent Auditor General.”
“Our nation has faced and continues to face important economic and social challenges… A great deal of fundamental and needed change has been initiated and implemented over the past five years. The Government is steadfastly dedicated to further pursuing and completing its change agenda in the period ahead. May God Almighty guide us along that path.”
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