The revelation by The Nassau Guardian last week that the government's chief advocate for value-added tax, Ishmael Lightbourne, has been dodging property taxes for at least a decade has been a major blow to the government's tax reform campaign.
It is embarrassing and raises questions about the state of tax collections in The Bahamas, and the credibility of the message.
How serious are we about collecting and paying taxes? What is the real reason we are in the current financial mess we are in? Where is the effort at proper assessment of the value of properties?
We also have another question: Are members of Parliament and other people in public life leading by example by making certain their taxes are paid and that they are obeying all laws, including the ones that require them to make annual disclosures of their assets?
Are they indeed the pillars of rectitude they are so often held out to be?
We would not be surprised if the Ministry of Finance sees a boost in revenue as a result of the revelation on Lightbourne. That, of course, would be a good thing given that at last reports there was $500 million in property taxes outstanding.
In light of the Lightbourne matter, we have heard that there have been internal party discussions on who is up to date with taxes and who is not.
On Friday, Prime Minister Perry Christie shied away from addressing the matter of his VAT messenger's failure to pay the mere $534 in property taxes assessed annually on his West Bay Street beachfront property.
Lightbourne's explanation is that he is financially strapped and cannot afford to pay. His home in Cable Beach and the land it sits on are assessed at just $321,000 -- something many observers find incredible.
Christie no doubt is aware of the prickly position this issue has put the government in as the VAT debate builds steam.
Speaking to a Nassau Guardian reporter, the prime minister said he wants to find out exactly what was said during Lightbourne's interview with us before addressing the controversy publicly.
"It does involve a human being, who was the top professional managing partner of a firm, and who was employed by me, and I have not spoken to him since," Christie said on Friday.
As far as we are aware, Lightbourne is still employed by the government.
The VAT messenger has said he recognizes the hypocrisy and contradiction in his public pronouncements on why there is an urgent need for VAT, and why there is a need for a revenue court to deal with tax dodgers.
While Christie did not wish to speak to the matter on Friday, he only recently suggested in an interview with National Review (prior to our disclosure on Lightbourne) that the real property tax system is unfair.
He also admitted that he had no idea whether his members were paying real property taxes.
In the context of the current discussion on tax reform, it might be a good idea for the prime minister to find out before he has an even greater embarrassment on his hands.
The prime minister should know the tax status of all those who sit around the table and are participating in national decisions that impact the tax status of the nation.
In fact, Christie should have also known (or did he know?) the outstanding tax issues as they relate to Ishmael Lightbourne.
The government is asking all of us to dig a little deeper into our pockets to help get our national financial house in order.
But more revelations like the one we made on Lightbourne would only create anger and discourage people from buying into the VAT message, which is already on shaky ground.
The issue of the non-payment of real property taxes is of course much larger than Ishmael Lightbourne.
In The Bahamas, there is not a culture of paying taxes.
While there are many more tax dodgers who face no consequences, the position the tax messenger finds himself in draws national attention given his consistent push for the implementation of VAT.
While Christie avoided commentary on the Lightbourne matter, his party's chairman, Bradley Roberts, came out in support of Lightbourne as an upstanding Christian man, and said officials in the Free National Movement (FNM) might be surprised to learn which of their members are not paying their taxes.
Roberts suggested the FNM ought to be careful in how it criticizes the government on this matter.
"I think that a full disclosure of who owes real property tax may be a surprise experience for them," he said.
"It's not only brother Lightbourne, but there are many others, and many others who are sitting in influential positions."
This was a weak defense from the chairman and a typical political response to such matters.
The fact that there are so many others who are not paying their taxes does not weaken the FNM's argument that Lightbourne is a "flawed messenger" who is unfit to carry the government's torch on the VAT campaign.
"Mr. Lightbourne's decision to not pay property taxes for 10 years suggests a willful refusal to pay," noted FNM Chairman Darron Cash.
"Consequently, he has lost all legitimacy as the principal spokesman and advocate of VAT."
We agree.
A new political reality is starting to take hold in this country: We, Bahamians, are not prepared to be fed nonsense by flawed messengers or those who create the rules. This should be a lesson for political parties and all who seek to direct the future of the Bahamian people

SHOCK

As it relates to whether PLP parliamentarians are paid up on real property taxes, the prime minister admitted, "I don't know the position".
"I will in fact review that with a view to seeing those of us who are in arrears of the various requirements in terms of taxes and with a view to advising them to meet the payments," Christie said.
He noted that people in public life, like others, sometimes fall behind in meeting their obligations.
"We have certain requirements like taxes, disclosure, and all of us are at fault from time to time of not complying with the time requirements, and so from time to time we review who has not done what and it is more pressing with the current accounts like BEC and BTC," Christie told National Review.
"But with real property tax it's very difficult.
"I was just explaining today how I was shocked because normally my wife would pay bills for us and I was just shocked to see what they're charging me for real property tax. In the valuation.
"It made me then realize if this is so for other people I have to review this with a view to ensuring that it is fair in all of the circumstances because sometimes valuations do not take into consideration how long it took somebody to build a house and the value of the years of putting into that house, and you look at the structure and the property and the location and you say oh, this is worth half a million dollars.
"But that person can't possibly afford to pay $8,000 a year in real property tax payments...Therefore, we are doing a review in addition to putting in place systems and software and even considering private collections, but we're doing a review of our taxation systems with a view to improving them.
"So I think as an order of first business what we will do is we will review the accounts payable to see in fact what the position is with respect to people in public life."
Again, the prime minister made the comment to us before our Lightbourne story hit the press.
While Christie suggested that he (Christie) is being overcharged real property taxes because -- in his view -- his property is over-valued for the purposes of the assessment of taxes, he did not reveal the value.
However, a senior real estate broker estimated yesterday that the prime minister's Cable Beach home and the land on which it sits are valued at well over $1 million.
We, of course, need a system that is fair, but if the minister of finance believes that he is being over-charged for real property taxes it speaks volumes to the state of the system itself.
How many other people perhaps believe that they too are being overcharged?
The senior real estate broker told us that he is pretty certain that Lightbourne is being under charged.
He estimated the property and the house to be a minimum of $2.5 million.
"You demolish that, you can build seven $1.5 million to $2 million condominiums on the beachfront," he said.
The broker, who spoke to us only on condition of anonymity, also told National Review all of the properties along Cable Beach have gone up in value since the construction of Baha Mar started and will further increase when it opens.
He said these properties should be reassessed for current value.
Correspondingly, properties that were once high in value where there is less economic activity should be reassessed downward, he added.
The prime minister' statement that valuations do not take into consideration how long it took somebody to build is purely an emotional statement, said the broker.
The broker said the length of time it takes to develop a property has nothing to do with assessing the fair market value.
"No matter how long he has pecked away at building a place, it does not matter," the broker said.
"What matters is if he decided to sell his property, he's going to sell it for what a willing buyer will pay for it, and he will go to a government assessor and the government assessor would determine the value of land on Cable Beach today is worth so much."

REFORM

According to Minister of State for Finance Michael Halkitis, as part as the reform of the real property tax system, the government has engaged real estate agents to assist in the valuations of the properties of the 1,000 people who came in during an amnesty period last year and said they never received a bill.
The interest payments on these bills have been forgiven, he said.
Halkitis said another problem that resulted from the inefficient system is that thousands of bills were going to the General Delivery section of the post office and never collected.
The government is now investing in a new system to improve record keeping, he added.
As part of the reforms, GPS satellite technologies are being used, and the department responsible for the collection of real property taxes is doing a better job at following up after bills are issued, Halkitis said.
"The amnesty is over, but we are still flexible and are willing to have people enter payment plans," he said.
As the government attempts to reform the real property tax system, it also faces the monumental tax of establishing VAT.
Successful implementation of the new tax has much to do with public education, messaging and preparation.
All of those elements appear now to be in jeopardy.
We said it here before that VAT, on its current path, appears doomed for a difficult birth.
The public education campaign has not yet built steam, although the implementation date is now just over four months away.
Legislation has yet to come to Parliament for debate, and the business community continues to push back.
The government no doubt is now examining its message, especially in light of recent revelations about its chief VAT advocate.
Concerns surrounding tax reform are of course multi-layered and complex.
As evidenced by the approach of successive governments to property taxes, the true test of VAT's success could very well lie in the willingness of authorities to be serious about dealing with a pervasive culture of tax dodging and a weak, ineffective system of tax collection.

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