To say this past week has been rough would be a serious understatement.
On Thursday, while on my radio talk show, I made a comment that would later prove prophetic. It came the day after the bombshell announcement that the value-added tax (VAT) rate would be increased from 7.5 percent to 12 percent.
I noted that the usual excitement that accompanied an impending holiday weekend seemed to be missing – that something felt different. In fact, I said it felt like the nation was in mourning. Hours later it was. We awoke to the news that four women had been killed and multiple people injured by an out-of-control vehicle during the Randol Fawkes Labour Day Parade. The parade’s theme, in and of itself, was eerie: “Workers Unite or Die: An Injury To One Is An Injury To All.”
I would like to extend my deepest condolences to all of the families still reeling from this incident. It was a preventable tragedy and most unfortunate. I pray that their souls rest in peace, that their family members can find serenity during this tumultuous time and that justice is served.
There seems to be a recurring theme of hurt spreading across the nation. Even before Friday’s tragedy, the vast majority of Bahamians were taken aback by Deputy Prime Minister and Minister of Finance, K. Peter Turnquest’s announcement that VAT was going up. The backlash was immediate and fierce, with many questioning what the government was thinking. I would have paid $1 million plus 12 percent VAT to be in the fly on the wall during those cabinet meetings to discuss this increase.
The government, no doubt, fully expecting the backlash, stressed that it was forced into this position. Years of fiscal mismanagement had taken their toll and we’re now paying for it, in the literal and figurative sense.
“Our government fully appreciates the sacrifice that the substantial increases in the VAT rate and other taxes will represent for our citizens. 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,” said Mr. Turnquest.
“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.”
Mr. Turnquest correctly noted that when countries hit crisis mode, the path to correction is “extraordinarily hard and painful.”
The increase, which comes into effect on July 1, is projected to bring in an additional $400 million in new revenue, allowing the government to pay off its “massive backlog of arrears.”
This is a nasty-tasting pill to swallow and I certainly understand the position the government has been placed in.
Bahamians are having a hard time digesting this news not only because it puts a further squeeze on their already empty pockets, but because they have to hear this news from the very same people who protested against VAT in the first place. This is why it is important for politicians to tread carefully and temper their criticisms when in opposition.
In 2014, Prime Minister Dr. Hubert Minnis, who was the then-Opposition leader, along with Mr. Turnquest, voted ‘no’ in the House to the Christie administration’s bill introducing VAT.
Two years later, Dr. Minnis’ stance did not change. He went a step further, uttering words that will haunt him for the rest of his political career.
“I don’t believe in increasing taxes. I believe in decreasing taxes and increasing opportunities. Increasing taxes is a lazy way out. When you don’t want to think, you just tax.”
What Bahamians are now left to conclude, is that not only is Dr. Minnis a hypocrite, but his government is increasing taxes because it is lazy and doesn’t want to think.
Tough decisions must be made. No doubt about it. But, the government must be careful not to tax the country out of debt while taxing Bahamians into poverty.
Just last month, the Central Bank’s Financial Literacy Survey 2018 found that nearly 50 percent of Bahamians were struggling to make ends meet and operating with monthly earnings usually insufficient to cover their living costs.
The survey stated that many Bahamians were living “above their means” and too heavily indebted and struggling with reduced incomes in the post-recession environment.
While the recession is officially over, salaries have flatlined, and that’s for those fortunate enough to have a job. The Chamber of Commerce recently warned that we’re in for a “very expensive summer” as global oil prices have surged to $80 per barrel. Many Bahamians are sitting in darkness because they cannot afford to have their electricity supplies reconnected.
The government has said that VAT would be waived on residential electrical bills that are $100 or lower. What the government has failed to consider is that many households are holding more family members now than ever before. Most times, you have a house of five or six people and only one person is employed. But, all six people are consuming electricity every day, and let me tell you, their bill isn’t going to be under $100, even if conservation methods are employed.
We must always think of those at the lower rung of the socioeconomic ladder. I am not a fan of hyperbole, but I agree with public sentiments that this increase will kill many Bahamians who are already suffering.
The time has come for Bahamians to shed this debt culture. We must step up our savings, if we are in a position to do so, eliminate what is unnecessary and stay disciplined and focused.
The time has also come for the government to give the people what they are paying for. After we have overcome this financial hurdle, we will tolerate no excuses from our elected leaders as it relates to infrastructural upgrades and improvements to our education and health systems. No more excuses. The clock is ticking.