The government’s decision not to remove value-added tax (VAT) off breadbasket items is “shortsighted and a betrayal” to thousands of struggling Bahamians, Free National Movement Deputy Leader Shanendon Cartwright argued yesterday.
“The announcement that VAT on breadbasket items is here to stay means that the pain and struggles for many poor, working and middle-class Bahamian families is here to stay as well,” he said in a statement.
“This struggle will unfortunately continue every day the government refuses to bring tax relief to the most vulnerable as they did for multi-millionaires. On behalf of the Bahamian people, we call upon the government to reconsider and not dismiss the cries of the people.
“Take VAT off breadbasket items.”
Cartwright was responding to Minister of Economic Affairs Michael Halkitis’ insistence that removing VAT off breadbasket items is simply not feasible.
On Friday, Halkitis noted that the Minnis administration in 2017 took VAT off breadbasket items.
“But at the same time … in order to be able to do that, they raised the rate from 7.5 percent to 12 percent,” Halkitis said.
“And so, I hear this call coming mostly from the political corners about doing this because … it’s a good political point to make, but recognize that when you begin to introduce exemptions, the only way you can do it is if you pay a higher rate on everything else.
“So, we have studied this, we’ve gone back and forth and our best advice is a lower rate, hence the 10 percent, lower than the 12, but with minimal exemptions because it’s more efficient … and, again, it’s not something that we did haphazardly.”
The Christie administration implemented VAT in 2015 at a rate of 7.5 percent.
In 2018, a year after being voted in, the Minnis administration increased the rate to 12 percent and introduced a zero-rating on breadbasket items and medication.
On January 1, 2022, the Davis administration reduced VAT from 12 percent to 10 percent, fulfilling a campaign promise, and got rid of zero-rated items.
Last week in the House of Assembly, opposition MPs repeatedly criticized the government’s decision to reintroduce VAT on breadbasket items and medication and called for it to be reversed.
The issue prompted heated exchanges between Cartwright and Englerston MP Glenys Hanna-Martin.