Prime Minister Dr. Hubert Minnis said yesterday his government intends to raise the value-added tax (VAT) exemption ceiling for electricity bills from $200 to $300 as energy costs soar and Bahamians grapple to keep their lights on.
“The government is mindful of the impact this has on all Bahamians, especially the poorest and most vulnerable,” said Minnis in a communication in Parliament.
“This situation is a legitimate issue for every Bahamian. However, there are a small few who are seeking to make political mischief out of this situation.”
Members of the opposition, including Cat Island, Rum Cay and San Salvador MP Philip Brave Davis, scoffed at this remark.
Minnis continued, “You would recall that the government in the 2018/2019 budget provisions made allowance that would exempt Bahamians whose monthly bills were under $200 from the payment of VAT.
“This was and remains a deliberate policy initiative to assist Bahamians of modest means.
“This recent temporary spike in fuel surcharge has unfortunately put a number of qualifying customers over the $200 threshold.
“I today advise the honorable House that the government will be moving an amendment to the law to allow for a temporary increase in the VAT exempt ceiling from $200 a month to $300 per month to the end of the fiscal year, that being June 2019.
“This will be made effective for December 2018 and will show up in the January billing cycles.”
The government had originally announced that electricity bills $100 or lower will be exempt from VAT, but later increased the ceiling to $200 after public outcry.
The government increased VAT from 7.5 percent to 12 percent in July.
Minnis added, “Additionally, I’ve requested the minister responsible and the BPL team to review and report back to Cabinet on the full range of options open to the government to address this temporary spike in electricity bills and even as we execute the longer-term strategies to reduce energy costs in The Bahamas.
“Finally, I wish to assure the Bahamian public that we remain resolute in the need for the country to substantially reduce its energy cost and the undue burden it places on the Bahamian citizen and in the course of doing business in The Bahamas.
“We will continue to explore a reduction of energy costs. We will make a substantial transition to solar and other renewable energy supplies.”
Bahamas Power and Light (BPL) bills have spiked in recent months. BPL officials say this is due to higher oil prices leading to an increase in the fuel surcharge.
The fuel surcharge typically makes up the majority of electricity costs for the consumer. BPL passes on the charge directly to the consumer.
The fuel surcharge has steadily increased this year. In the February billing period it was 14.75 cents per kilowatt hour (kwh); in the March cycle it was 14.9 cents per kwh; in April, the surcharge rose to 15.68 cents per kwh; in May, it jumped to 17.46 per kwh; in June, it was 17.38 cents per kwh; in July, the surcharge per kwh was 19.46 cents; and in the August and September billing periods it was 19.15 cents per kwh.
BPL Chairman Dr. Donovan Moxey said consumers might not get any relief for months as the electricity company continues to grapple with generation issues stemming from a fire that impacted two of the Clifton Pier power station’s largest engines in September.