The government of the Bahamas will be increasing Value Added Tax (VAT) by 12 per cent as of July 1.
This was revealed in the government’s 2018/2019 Budget Communication implementing the Policy Agenda and securing core fiscal objectives that was presented to Parliament by Deputy Prime Minister and Minister of Finance K. Peter Turnquest on Wednesday.
The government projects the VAT increase will help it reap US$1.2 billion in revenue in the next fiscal year, a 60 per cent increase compared with the forecasted VAT revenue for 2017-2018.
Turnquest said this was indicative of the government choosing not to wait until it is too late to shore up the economy, but opting to act now and act responsibly.
“Specifically, we are increasing the taxation of gaming house activities through the introduction of a sliding scale of rates applied to taxable revenue, namely: up to $20 million, a rate of 20 per cent; between $20 million and $40 million, a rate of 25 per cent; between $40 million and $60 million, a rate of 30 per cent; between $60 million and $80 million, a rate of 35 per cent; between $80 million and $100 million, a rate of 40 per cent; and over $100 million, a rate of 50 per cent,” said Turnquest.
He said there will also be the taxation of gaming patrons through a five percent stamp tax to be levied on both deposits made by patrons at the gaming houses and any non-online games/digital sales.
In addition, there will also be an increase in the various Immigration fees; introduction of new port fees; the Real Property Tax on foreign-owned vacant land to 2 per cent of value, up from 1.5 percent; licensing fees on large commercial vehicles by $50 for Class B and Class C vehicles; and increases to police record fees, fingerprinting fees for casino employees, and Labour Certificate fees.
“Most substantially, the government is proposing an increase in the rate of Value Added Tax from the current 7.5 percent to 12 percent effective July 1st.”
“Our government fully appreciates the sacrifice that the substantial increases in the VAT rate and other taxes will represent for our citizens.But as I have repeatedly said on record: this government was elected to do what is right for the welfare of the country and not to do what is politically expedient or politically popular.”
“Facing the situation that we have, we could do as governments have done before – and simply present a misleading budget with under-budgeted allocations and hidden obligations. We could have kicked the can down the road and borrowed some more – delaying the inevitable day of reckoning.By playing this game we would have only made a bad situation worse. The country’s bond rating is at junk status.”
The Finance Minister also attempted to soften the blow of the higher VAT rate by unveiling VAT free breadbasket items, duty reductions and exemptions.
“Effective August 1, we are eliminating VAT on all breadbasket items, with the exception of sugar, as sugar will – for health reasons – be removed from the list of breadbasket items,” he said.
These items include butter, cooking oil, mayonnaise, grits, cheese, corned beef, evaporated milk, margarine, rice, flour, tomato paste, baby cereal, soups, broths, powdered detergents and mustard among other things.
He said VAT will also be eliminated on medicines and residential insurance.
Turquest said the duty on aeroplanes and helicopters will also be eliminated – in an effort to build an Aeroplane Registry Industry.
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