11302021 BUSINESS

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business@tribunemedia.net

TUESDAY, NOVEMBER 30, 2021

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VAT rate hike slashed consumption by $2bn By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net CONSUMER spending shrank by $2bn in the year after the Minnis administration hiked the VAT rate to 12 percent, the Auditor General’s Office calculated in a newly-released report. Assessing the rate increase’s impact on VAT performance in the 20182019 fiscal year, the report said total tax filings submitted to the Department of Inland Revenue showed that money spent on goods and services in the Bahamian economy nosedived by 34 percent year-over-year. The Auditor General’s Office said that comparing total filings by VAT registrants for 2017-2018, when the tax rate was 7.5 percent, with the following fiscal year’s returns showed

• Auditor General: Consumer spend nosedived by 34% • ‘Phenomenal’ drop-off but magnitude is questioned • Inland Revenue collected just $27m more at 12% rate that the “consumption value of VAT-able goods and services” fell from $5.945bn to $3.943bn in 2018-2019 after the 4.5 percentage point rate increase was introduced. Defining consumption value as “the amount of money injected into the economy”, the Auditor General’s Office said the “total” value - which combines the worth of imported goods with what consumers purchased in

the domestic economy fell by $1.6bn or 18 percent year-over-year to $7.47bn as compared to $9.07bn in 2017-2018. The more measured decline in that indicator resulted from Customs valuing VAT-able imports at $3.522bn for 2018-2019, which represented a 13 percent or $404.056m increase upon the prior fiscal year. Yet, despite the rate hike, the report by the

Auditor General’s Office showed that the Department of Inland Revenue (DIR) collected just over $27m more in VAT in 2018-2019 than it did the prior year when the rate was still at 7.5 percent. The DIR’s collections grew by 6 percent to $473.155m, which was only slightly ahead - by just over $50m - of the $422.587m gained by Bahamas Customs. The latter agency saw its VAT collection jump by 80.7 percent yearover-year, rising from $233.813m in 2017-2018 to $422.587m. “Overall, the importation value of goods increased while the consumption value of VAT-able goods and services declined in the domestic market,” the

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Minnis: Cruise giant’s PI lease is too long By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net DR Hubert Minnis yesterday tacitly admitted that the effective 150-year Crown Land lease granted to Royal Caribbean on Paradise Island was too long as he sought to defend the deal. The former prime minister argued that “the

benefits certainly outweigh” the relatively minimal rental rates that the cruise giant agreed to pay his administration for the right to use seven Crown Land acres, plus three seabed acres, after the deals first exposed by Tribune Business came under attack in the House of Assembly. He spoke out after Leslia Miller-Brice, the

Sea Breeze MP and ambassador to CARICOM, slammed the two lease arrangements as “the height of irresponsibility and disrespect for the Bahamian people”. She likened the Royal Caribbean agreements to “selling our souls and selling our birthright”, and said: “There are many

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DR HUBERT MINNIS

THE former prime minister yesterday slammed the Davis administration’s decision to eliminate VAT-free breadbasket food items and medicine as “heartless and disgraceful”. Dr Hubert Minnis, in his contribution to the supplemental Budget debate in the House of Assembly, launched the Opposition’s full-frontal assault on the proposed VAT reforms by asserting that lower income Bahamians will face an

increased tax burden while products such as “caviar and champagne” enjoy a 2 percent cut. Arguing that the end to tax breaks for foods such as milk, corn beer and grits will come at a price for many Bahamians, the exprime minister said the new administration’s return to a lower rate, broad-based model will have a “devastating effect on the inner city”. Asserting that he had “done my research” with ‘Mom and Pop’ stores in

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Ex-Parks chairman blasts PM’s ‘unfounded’ claims • Cartwright ‘resents’ charge of ‘reckless behavior’ • Says Authority ‘woefully underfunded’ from get-go • Calls for move away from ‘MPs’ recommendations’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas Public Parks and Beaches Authority’s former executive chairman last night said he “resents” accusations levied against him by the Prime Minister and branded them “unfounded”. Shanendon Cartwright, the FNM’s St Barnabas MP, told Tribune Business that Philip Davis’ allegations

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SHANENDON CARTWRIGHT

‘From headwinds to hurricanes’: Minnis denies 15% VAT increase By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

Ex-PM slams ‘heartless’ VAT breadbasket return By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

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THE former prime minister yesterday “categorically” denied that he planned to “turn headwinds into a hurricane” if re-elected by following the IMF’s recommendation to hike VAT to 15 percent. Dr Hubert Minnis was forced to assert “that was never the intention” after his successor, Philip Davis

QC, revealed that an International Monetary Fund (IMF) technical assessment suggested increasing VAT beyond the present 12 percent rate to maintain the zero rating and exemptions structure. The Prime Minister argued that the IMF report provides evidence to support the Progressive Liberal Party’s (PLP) election campaign assertion

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