Seeking to help Bahamians where there is very little breathing room in an already strained budget, Deputy Prime Minister and Minister of Finance Peter Turnquest yesterday announced a value-added tax (VAT) holiday among several other tax relief measures for the 2020/2021 fiscal year.
Called the “back-to-school” VAT holiday, the initiative sees the removal of taxes on school supplies, clothing and select food items for the two weeks leading to the reopening of schools, Turnquest said while delivering the 2020/2021 budget communication.
“As one would imagine, the scope for significant tax reductions is marginal in a situation such as the one in which we find ourselves. Nonetheless and consistent with specific policy priorities, we do propose the reduction of taxes in a few targeted areas, thereby providing millions of dollars in savings in aggregate for parents across the country, as they prepare students to return to school,” Turnquest said in the House of Assembly yesterday.
“I would note that the tax exemption will only apply to items that are bought inside the country and not those that are imported directly into the country. Just as we want to support Bahamian parents in this costly annual undertaking, we also want to support local businesses. So we want to encourage you to shop at home.”
While the government is providing tax relief initiatives in this upcoming fiscal year, Turnquest stressed that the government is not increasing taxes.
In addition to the VAT holiday, the government intends to extend the Special Economic Recovery Zone (Relief Order) 2019, which allows for the tax-free importation of goods directly into the islands impacted by Hurricane Dorian and was supposed to end on June 30. It will now end in December 2020 to support the ongoing recovery.
“For the period January 1, 2021 to June 30, 2021, the concessions will be extended to cover building materials only. Let me repeat: Abaco and Grand Bahama will continue to enjoy the current VAT and duty exemptions through the end of the year,” Turnquest said.
The government has also proposed, beginning July 1, the reduction of customs duty on fishing materials – fishing rods, reels, lines, tackles and other materials – from 45 to 20 percent; and the reduction of duty on farming equipment for the use in backyard farming – for example, spades, shovels, work benches, machetes and hedge shears – from 25 to 10 percent.
The government is also hoping to spur activity in the construction sector by reducing duty on all materials such as wood, glass, granite, steel, electrical supplies and fixtures, carpet, landscaping material and plumbing materials, to 20 percent.
“We are removing the duty from nitrile examination gloves (antibacterial gloves), which are used as personal protective equipment (PPE) to make it less costly for hospitals, companies and individuals to acquire these. For a period of one year, we will remove the duty on other PPE items, such as gowns and other surgical supplies, to ensure our healthcare workers, both private and public, are protected as we continue to fight this pandemic,” Turnquest said.
“We are also reducing duty on a few items to further encourage the adoption of more green technologies and plastic elimination, including duty reductions on environmental sea trash cans to assist in oceanic conservation and reusable metal water bottles from 45 percent to 10 percent; and duty reductions on motorcycles with an engine size of 125cc or less and electrical motorcycles, from 75 percent to 10 percent. Off-road motorcycles will not be included in this rate reduction.”
Turnquest also announced the expansion of tax-free transfers of land where there is no change in beneficial ownership, with the approval of the VAT controller.