National Review

Voter beware   

‘Tis the season when many political carrots will be dangled 

When it comes to obfuscation, double speak, political pandering and rank hypocrisy, the leadership of both main political parties in The Bahamas have no equal.

With the country’s misery index at a record high and with increasing signs that an early election might be looming, Progressive Liberal Party (PLP) Leader Philip Brave Davis last week suggested that if elected to office, his administration would revisit value-added tax (VAT) and identify “natural resources that could help us address our immediate debt burden”.

He pledged to “alleviate the burden of taxes on the Bahamian people, which may necessarily mean revisiting whether VAT is the appropriate [tax].”

While Davis did not pledge to reduce or eliminate VAT, the inference that could be drawn is that his government would at least adjust the tax at a level that would be much more favorable than the current 12 percent rate.

Davis also suggested that in addition to tax reform, his administration would restructure the debt to avoid an International Monetary Fund restructuring loan.

“We have a plan that hopefully what we meet can give us the opportunity to buy the time to do what is necessary to grow the economy and implement some of the other initiatives that we will have,” he said.

The PLP has not yet provided any specific proposal that could be carefully considered and dissected by fiscal and economic experts and other Bahamians anxious for announcements on sound policy initiatives to reverse the dire fiscal and economic conditions that currently exist in a climate of grave uncertainties.

In indicating that his administration would “revisit” VAT, Davis has assumed a similar tone and posture adopted by Free National Movement (FNM) Leader Dr. Hubert Minnis, who in opposition noted that introducing VAT “has the almost certain potential to significantly and negatively increase the cost of living in every sphere upon the backs, particularly of the poorest Bahamians, and the long-suffering and shrinking middle class”.

Minnis declared in 2014, “Everybody agrees that we need tax reform. But if you try and introduce a tax that causes pain and suffering and undue stress on the middle class and the poor, resulting in further shrinkage of the middle class and further growth of poverty, we will repeal it.”

We all know the story well.

Upon assuming office, members of the Minnis administration reported to the people that they had met the cupboard bare, that the fiscal situation was far bleaker than they could ever have imagined, and there was an immediate need to borrow $400 million.

In May 2018, the group that had railed against the 2015 implementation of VAT, announced that the 7.5 percent rate implemented by the Christie administration was being increased to 12 percent.

Peter Turnquest, at the time finance minister, told Parliament, “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.”

He said the Minnis administration determined it could not present a misleading budget with under-budgeted allocations and hidden obligations, but noted that the inevitable day of reckoning had come.

As Minnis and the FNM did in opposition, Davis too, is now attempting to use the same strategy of dangling “political carrots” before a largely dispirited and stressed electorate. 

He appears now to be distancing himself from the justification he and others in the Christie administration gave ahead of VAT’s implementation in 2015.

They had argued repeatedly that the tax was absolutely necessary to tackle the debt and meet the government’s obligations, and that studies and assessments had proven the tax would be viable to meet the country’s future financing needs.

While Davis now pledges to alleviate the tax burden on Bahamians, the so-called compensation element to VAT to assist low-income families that Davis had suggested in 2014 would be implemented, never became a reality.

Referencing the New Zealand model, the then deputy prime minister had said, “There is a compensatory aspect to it to ensure there will be very little impact on those who are disadvantaged”.

The regressive nature of VAT was never in doubt.

The shopper from Old Fort Bay who earns $300,000 a year and pays $10 for a pack of toilet paper, pays the same rate of VAT that the shopper from Bain Town, who earns $12,000 a year pays on a $10 pack of toilet paper.

But Christie, Davis and the PLP determined that tax “reform” necessitated the implementation of this regressive tax as there was an urgent need for a new source of revenue generation. They also repeatedly said that the Ingraham administration had laid the groundwork for the implementation of VAT.

Equitable 

As the FNM did in 2017, years prior in 2012 when the Christie administration came to power, PLP ministers declared that the state of government finances was much more dire than they could have imagined while in opposition.

Upon assuming office in 2012, the Christie administration immediately borrowed $504 million, blaming its predecessors in office for mismanagement of public funds and pointing to the over-budget New Providence Road Improvement Project (NPRIP) for the country’s “fiscal deterioration” during the preceding five years.

Not long after, they started to make their case for why VAT was absolutely necessary.

While Davis, now leader of the PLP with his eyes on the prime ministership, talks about easing the burden that VAT is placing on Bahamians, while he was in office, he had gone as far as touting the tax as “equitable”, even while Minnis and others in the then opposition had highlighted its regressive nature.

Davis felt then that VAT was in the best interest of the Bahamian people.

In February 2014, while debate over VAT was raging, Davis dismissed a prediction by then Marco City MP Gregory Moss that the PLP would lose the next general election if it implemented VAT. Moss had argued that the implementation of VAT would be an affront to the PLP and a betrayal of the Bahamian people.

But Davis predicted that the implementation of VAT would likely propel the PLP into another general election victory in 2017.

“What we are doing at the end of the day is making a decision that is in the best interest of the Bahamian people,” he said.

“Once they see that decision is in their best interest, I think they will not be voting against their interest and voting us out.”

As Turnquest would do years later upon the introduction of an even higher rate of VAT, Davis noted in September 2014 that “the world over, leaders are being forced to make unpopular decisions which have made many people very angry. Tough times are always the most trying, especially for political leaders.”

Davis, then deputy prime minister, told reporters that Bahamians should accept the new tax just as they adhere to taxes while shopping in the United States.

While contributing to the midyear budget debate in the House of Assembly on February 15, 2015, months after VAT was introduced at a rate of 7.5 percent, Davis, stated, “It is worth noting here that VAT has been implemented smoothly, and provides a fair and equitable tax system in The Bahamas. It represents revenue that will be put towards services that all Bahamians will benefit from and further reduce our debt.

“Through this reform of our country’s tax system, we will be infinitely better positioned to make the vital investments in infrastructure, healthcare, education, culture, and public safety.”

Speaking at a Chamber of Commerce Conclave on April 21, 2016, he told business leaders the introduction of VAT “has enhanced our outlook”.

But heading into another election, VAT is a dirty word.

Providing any hint of hope that it would be reconsidered is probably more of a shameless effort at gaining political mileage than providing any sound or specific plan to tackle government debt, which grew from $8.1 billion at the end of June 2020 to $9.39 billion at the end of December 2020.

Minister of State for Finance Kwasi Thompson branded Davis’s statement that a PLP administration would review VAT as “reckless, self-serving and a shameless attempt to curry favor”.

“Unlike some who would prefer to engage in idle posturing for purely political reasons, the Minnis-led government takes seriously its obligations to proper fiscal planning and fiscal management,” Thompson said.

His comments were no different than those made in 2014 by Ryan Pinder, then the minister of financial services, after Minnis pledged to repeal any tax introduced by the Christie administration that causes suffering.

“I think it was irresponsible for the leader of the opposition who aspires to be prime minister to make such continuously reckless statements,” Pinder said.

“We’re putting in responsible tax reform in the best interest of the government and the Bahamian people. I would think a responsible leader of the opposition would put forth recommendations rather than just make reckless rhetoric.”

Likewise, Thompson has called Davis’ recent statements “empty promises that they have no intention of keeping”.

Suffering

As Minnis stated in 2014, VAT has caused suffering for thousands of Bahamians. VAT has become an inflationary mechanism in The Bahamas. Everything has gone up, except wages and job growth.

While Minnis in opposition sold dreams, the realities of governance have trumped the reckless rhetoric and empty promises made.

The Minnis administration did eliminate VAT on breadbasket items, and eliminated VAT on electricity and water bills up to a certain amount, but it did not repeal VAT as Minnis claimed his government would do.

Anyone politically naive enough to expect a Davis administration’s so-called review or revisit of VAT to lead to any great ease of the tax burden would likely be left sorely disappointed.

Davis, the panderer, also sought to appeal to the current sentiment among a segment of the population pressing for a fair share of benefits from the country’s natural resources.

It is why in claiming what his government would do to tackle the debt, he spoke of identifying natural resources “to help us address our immediate debt burden”.

It is too bad that the Christie administration with Davis as the number two man, did not place a keen focus on the proper exploitation of natural resources and Davis was never publicly an advocate for such.

The former government had now and then talked a good talk on this issue, but there was never any clear or focused action.

In 2014, during his budget communication, PM Christie said in Parliament, “My government will review potential revenue associated with the sustainable use of our natural resources, including sand, aragonite, aggregate and salt. The government must ensure that the people of The Bahamas get fair compensation for the use and exploitation of our natural resources.”

The tendency of many politicians to talk, but not deliver, and to appeal to popular desires through their declarations in an effort to win favor with the public without honoring commitments have all contributed to widespread cynicism among the electorate.

There is always room for politicians who have been in the game for a long time, who have seen what works and what does not work, to adjust their positions to respond to circumstances as they exist, but there ought never be room for politicians who insult the intelligence of the people and expect them to swallow the same hypocritical and insincere pledges and trust that those disingenuous enough to utter them would miraculously be able to keep their commitments if given another opportunity to govern.

Times are hard for so many Bahamians, and the idea of their tax burden being alleviated might seem attractive, but they ought not be gullible and blinded by carrots dangling on political sticks.

More than pledging to reform the tax system, Davis and the PLP ought to present that plan for scrutiny ahead of the next election, as they seek to sell themselves as a serious and trustworthy option to lead our country during these most perilous of times. 

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Candia Dames

Candia Dames is the executive editor of The Nassau Guardian.

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