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Tax reform necessary for growth

Minister of State for Finance Michael Halkitis has warned of the effects of not implementing fiscal reform, saying failure to adopt a new system of taxation would reduce investment and harm investor confidence. 

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TheBahamasInvestor.com
Friday, April 4, 2014
Friday, April 4, 2014

PM on PPP

Pictured: Hon Michael Halkitis, Minister of State for Finance speaking at the National Conclave of Chambers of Commerce in The Bahamas. (Photo Harry Cutting/©Dupuch)

Minister of State for Finance Michael Halkitis has warned of the effects of not implementing fiscal reform, saying failure to adopt a new system of taxation would reduce investment and harm investor confidence.

According to the Minister, government debt would rise to 62 per cent of GDP if there was no reform and The Bahamas would face a credit rating downgrade.

“In order to ensure economic growth and stability going forward, The Bahamas will need to diversify its sources of revenue collection,” he said, speaking at the National Conclave of Chambers of Commerce in The Bahamas this week.

Three months ahead of the proposed July 1 implementation of value added tax (VAT), the government is prioritizing public education and industry consultation with training programmes soon to be rolled out and public meetings held throughout the country.


In addition, the government has received “significant feedback” from industry groups, according to Halkitis, who acknowledged that there has been much debate on whether VAT was the best course of action. “We have had a spirited discussion about VAT alternatives,” he said. “The Ministry of Finance gave serious consideration to the alternatives.”

“We have one thing in common when we get to the bottom line. We all appreciate that reform of the fiscal system is necessary.”

The government intends to publish guidelines on the proposed reforms this month. It has yet to determine the rate of VAT or what goods and services will be exempt.

The National Conclave took place at Breezes Resort this week. Also on the agenda for the conference was public private partnerships, trade, arbitration and the country’s National Economic Development Plan.

cmorris@dupuch.com

The Bahamas needs to become a full member of the World Trade Organization (WTO) to allow it to trade on an equal footing internationally, according to Minister of Financial Services Ryan Pinder, who said the government is pushing ahead with its bid for accession by negotiating with various members countries.

Focol Holdings Limited (FOCOL) has elected a new board of directors.

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