Good news for The Bahamas. How to fund the key political promise of reducing VAT is answered very positively.

JAMAICA AND THE BAHAMAS - In Brief 29 Oct 2021 by Keith Collister

In his supplementary budget presentation on Wednesday afternoon, Prime Minister Philip "Brave Davis" announced that the promised reduction in VAT from 12 to 10% will be achieved in a revenue neutral way by eliminating the zero rating under VAT of a variety of items. He further claimed that the Ministry of Finance team had worked with some of the brightest minds at the University of the Bahamas and the Government and Public Policy institute as well as international consultants, performing extensive modelling and financial analysis, to bring it back closer to the original New Zealand model implemented in January 2015, meaning simple in design with few exemptions. He advises this simplicity had been eroded since then by having many classes and types of items being zero rated, which experts advised were an ineffective and inefficient way to provide relief to the vulnerable in the society, with the preference instead being for the re-introduction of direct cash transfers.He announced a five year revenue to GDP target of 25%, which should implicitly eliminate the fiscal deficit. He is reintroducing the Revenue Policy Committee, a tax expert committee, which ceased to function in 2017.He advises that the suite of fiscal responsibility acts passed were flawed, with no regulations (to put them into operation), and had no procedural manuals (poor internal processes) which he will fix.He is also appointing a debt advisory committee under respected Bahamian James Smith, a former Minister of Finance, with representatives from domestic and foreign financial institutions based in The Bahamas.Finally, we are advised separately that the Fiscal Council, only recently started, has not ye...

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