Bahamian Minister of Finance, Senator James Smith, revisited the thorny issue of tax reform this week, stating that the introduction of VAT or a sales tax will be necessary if the country is to fully participate in regional trading blocs such as the Caribbean Single Market and the FTAA initiative.
Delivering a keynote speech at the Bahamas Business Outlook on Tuesday, Senator Smith suggested that: “It would seem to me that at some point in time, possibly this year, The Bahamas will have to decide on its future relationship with the Caribbean Single Market and Economy.”
He went on to add that given “taxes on income are not considered to be an option,ﾔ should the country decide to fully sign up to the CSME, the government has been advised to look closely at ﾓsome form of sales or value-added tax.”
However, the jurisdiction remains, at best, ambivalent towards the Caricom intitative, and the Senator noted that the majority of Bahamians are unsupportive of many of the changes that the CSME will bring, particularly freedom of movement.
“If that is indeed the case, then it would seem to me that the logical approach to the CSME would be to seek derogations or exemptions from those parts of the agreement which are deemed to be unpalatable,” he commented.
Nevertheless, the minister argued that there would remain a need for tax reform even if the Bahamas remained aloof from the single market, as currently the vast majority of the governmentﾴs revenues are raised through customs levies and import tariffs.
By Amanda Banks, Tax-News.com
