Minister of Finance and Deputy Prime Minister Peter Turnquest said yesterday the government is not on track to introduce any new progressive tax structures after the International Monetary Fund (IMF) suggested in a statement released Wednesday that The Bahamas implement a low-rate income tax in an effort to "strengthen revenue".
The IMF's "Staff Concluding Statement of the 2017 Article IV Mission" suggests The Bahamas implement the system while reducing import duties.
The IMF statement further suggests this structure would make the country's tax system more progressive and "help protect infrastructure and social spending".
The IMF team, led by Senior Economist Fabian Valencia, visited The Bahamas from July 12 to July 25.
The IMF also warns in its statement that the country's National Health Insurance (NHI) program should not be instituted without new revenue streams, like a new tax, to fund it.
However, Turnquest said, outside of any reforms mentioned in the government's 2017/2018 budget, income tax "has not been any kind of policy consideration to this government".
"Not at this time," said Turnquest. "As we look towards trying to simplify our tax structure and making the ease of paying taxes easier, as well as stabilizing our government revenue stream, it may be something we do some analysis on just to see whether it makes sense."
When asked why the IMF would suggest implementing a new tax structure, even with value-added tax still in its infancy, Turnquest said the organization simply made its suggestion based on what it sees.
"Obviously we take their advice, we would analyze and make decisions for ourselves," he said. "We have not made any consideration or any adjustment to the taxation rates."
Beyond the suggestion from the IMF, Turnquest said the organization's visit was "very positive" and so was much of the IMF's statement, which lauds the government's fiscal plan.
"Completing ongoing reforms to modernize the public financial management system and an adequate financial oversight of public enterprises are critical for an effective medium-term fiscal framework," the IMF statement notes.
"Delivering on the announced fiscal targets would ensure a firmly downward trajectory for public debt."
The IMF also noted that The Bahamas has struggled with a stagnant economy for five years, and acknowledged that hurricanes, the stalled Baha Mar project and this country's eroding competitiveness, "resulted in declining real GDP and income relative to other Caribbean economies".
"Weak economic activity, compounded with high fiscal deficits, have led to a sharp increase in the public debt burden, and has complicated the resolution of banks' high level of non-performing loans," the IMF statement notes.

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