Bahamians Told To Accept The Inevitable On VAT

by Amanda Banks, Tax-News.com, London

16 June 2005

The Bahamian foreign affairs minister, Fred Mitchell has told legislators that the country can no longer keep ducking the issue of taxation, warning members that the introduction of a value added tax system is an inevitability.

"Look at the Budget statement. It is filled with references to value added tax. The press has been stressing that Government will not introduce VAT. That is true but what should also be seen in the Budget statement is that Value Added Tax has to come," Mr Mitchell remarked during the House of Assembly's debate on the 2005/2006 budget on Monday.

As has been the case for several years, the budget forecasts shows that the largest source of revenues for the Bahamian government's coffers will come from import and export duties, which are expected to reach $507.5 million in 2005/2006, an increase of almost $30 million from the previous year.

Participation in the CARICOM Single Market Economy will mean the Bahamas will have to dismantle its system of tariffs and customs. However, Mitchell stressed that while VAT was an inevitability, the government was against the idea of the CSME's common external tariff.

"With regard to the CARICOM tax regimen, some of the duties under the Common External Tariff are in fact higher than the Bahamas' existing duties so it is likely that there would be very little adjustments required at all," he noted.

"But the Bahamas must look at its tax system because unless we do so, we are looking at a sea of red ink for the foreseeable future," Mitchell warned.

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