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October 01, 2013



VAT is all promise and no performance.. When challenged, none of the so-called government paid, low information consultants could name one single country where the implementation of VAT has ever produced the projected revenues required.. VAT only raises the real price of goods and services creating spiraling inflation which soon creates an environment of stagflation of even higher inflation and flat to no real economic growth.. Don't believe me, Greece, Italy, Spain, Portugal and Ireland all have VAT of 20 percent and higher and these countries are the economic basket cases of Europe.. VAT has had no impact on increasing revenues and only was the catalyst for $262 billion in leakage and VAT fraud in the EU for 2011.. That is significant as it is in excess of 1.5 percent of GDP..

What should be even more concerning is that the government propagandists never mentioned, not even once, how VAT would help pay down our out-of-control deficit.. Again, VAT never rises the promised revenues so the deficit just keeps on growing.. In addition, increases in the absolute numbers on the poverty rolls was never mentioned as again VAT induced inflation is a direct cause of rapidly increasing poverty..

VAT will destroy the Bahamian economy just as it has done in example after example of other countries around the world.. We have no safety net as Greece had with Germany.. The game is not over yet and Greece and the other basket cases still are on the edge of economic collapse.. Did we mention Cypress and Iceland?? Better save for another time as the collapse of their banking systems are rather frightening..


Imposing VAT is a crime against the Bahamian people who know not what pain and suffering will follow.. VAT is a regressive consumption tax which takes the highest percentage of tax from the incomes of the poor.. In many countries it is a negative force which has expanded poverty.. How could any humane, democratically elected government inflect such discomfort and emotional distress on it people is totally beyond belief..

Prices in the Bahamas will rise at rate of about 18 to 21 percent or higher as merchants pass the 15 percent VAT as well as administrative costs on to their customers.. Such increased costs directly reduces consumer demand and yields less VAT revenue as the merchant's revenue decline.. Less inventories will be purchased in response to falling demand.. This not only hurts the private sector as well as unsuspecting consumers who are forced to pay more or just do without.. Businesses respond by culling expenses (employment)and reducing investment which is the driving force to expanding employment and creating real wealth.. Already some small business retailers have closed their doors as increased government fees and the threat of VAT make it impossible to remain profitable.. Off the top revenue taxes never work and discourage needed capital formation..

The real threat to the economy is that if past experience is correct, government will not be able to increase revenues to pay the blotted and unproductive government bureaucracy.. More than likely revenues probably will decline and the hug government deficit will continue to grow beyond control.. This crisis has been forty years in the making by successive governments, and anyone that thinks VAT will make a meaningful difference needs their head examined.. But then our government perhaps has truly gone mad hoping to make something out of nothing.. That is the way governments think and that is why governments fail in creating wealth and employment.. Government only take and transfer wealth, but they never can create it..

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