VAT hike to 12 percent
The increase will come into effect on July 1.
Turnquest said this revenue generating measure is meant to address the fiscal gap and help the government avoid a crisis.
“Our government fully appreciates the sacrifice that the substantial increases in the VAT rate and other taxes will represent for our citizens,” Turnquest said as he presented the budget communication in the House of Assembly.
“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 reason for that is because others before us failed to act promptly and judiciously. But worse than the junk status, the penalty for inaction is a continued quickening crawl toward a fiscal point of no return. And as we have seen, when countries hit crisis mode, the path to correction is extraordinarily hard and painful.”
VAT was first introduced in The Bahamas in January 2015 under the Christie administration.
Today’s announcement came shortly after Turnquest announced VAT will be eliminated on all breadbasket items, with the exception of sugar.
Turnquest also announced an increase in police record fees, fingerprinting fees for casino employees and labor certificate fees. He did not detail those increases.
He also announced a significant increase in gaming house taxes through the introduction of a sliding scale of rates applied to taxable revenue.