The Bahamas’ regressive tax structure is exacerbating inequalities in the country, the United Nations (UN) Common Country Analysis 2020 on The Bahamas points out, adding that this country is one of only a few in the region not collecting corporate or income taxes.

The UN report adds that the tax intake is one of the lowest in the region, while contending that raising that intake rate to the regional average could help the country finance projects that work toward satisfying the Sustainable Development Goals (SDGs) due in 2030.

SDG number ten, which calls for reduced inequalities, is being affected by government’s continued use of regressive tax methods.

Those methods, under recommendation by the Economic Recovery Committee, are to be re-evaluated.

“While the government has made a substantial effort to increase its spending, especially through the introduction of a value-added tax (VAT) in 2015, it is still hesitant to levy income tax, either corporate or personal,” the report states.

“The argument is that not levying an income tax is part of the country’s development strategy, but under the current circumstances, it seems untenable to maintain that position in the long run.

“Revenue increased from 12.8 percent of GDP in 2013 to 16.4 per cent in 2018, a substantial increase, but still a long way off from the average for Latin America and the Caribbean, which stood at 23.9 per cent in 2018. While the introduction of the VAT may have expanded the tax base, it did so in a highly regressive way, disadvantaging the poor and exacerbating existing inequalities.”

According to the UN, only a small percentage of the government’s revenue is currently being used to get the country close to achieving the 2030 SDGs.

The UN suggests that the government create an enabling environment for private sector development in order to achieve the SDGs.

“Opportunities to increase levels of private sector participation and introduce private sector technology and innovation for both economic and social value must continue to be explored in order to meet the financing gap,” the report states.

“Another source of private funding is through charity. The Bahamas benefits from a very active civil society that can help direct resources specific to those left furthest behind.”

Click here to read more at The Nassau Guardian