Govt’s austerity measures must be balanced with revenue generation, says Seymour
While former President of the Grand Bahama Chamber of Commerce Kevin Seymour lauded the government’s move to use austerity measures to reduce debt levels, he said the move should be balanced with some form of revenue generation.
Seymour’s comments come in the wake of the International Monetary Fund’s (IMF) suggestion for The Bahamas to implement a low-rate income tax to help “strengthen revenue”. The IMF also suggested The Bahamas implement the system while reducing import duties.
Seymour said the question that needs to be asked is “why the government finds it necessary to have another tax”.
He pointed out that the recurrent deficit continued to increase, despite the implementation of value-added tax (VAT) in 2015. “We are continuing to feel the weight with the debt burden,” he said.
Seymour said he applauds the Minnis administration for its austerity initiatives, but noted that austerity by itself “is not going to do it for us”, stressing that it has to be balanced with some sort of revenue generation.
Seymour also indicated that if the government is seriously looking at an income tax, “import duties should be entirely eliminated”.
“An income tax rate should be sufficient such that it covers some part of the deficit,” he said.
“If you have a situation where it (the government) does impose income tax, assuming they eliminate the duty, which should translate to lower prices in the grocery store, it could be advantageous to our lower income families.”
However, Seymour explained that the government has to be careful when it comes to people with higher incomes in the range of $100,000 to $500,000.
“Those persons would pay a higher rate, but the government has to be careful, because it can discourage FDI (foreign direct investment) investors by pitching income tax too high,” he added.
“They would have to keep taxing simple. They would have to minimize things like credit and deductions.”