Prime Minister Dr. Hubert Minnis outlined the various options that the government had on Value Added Tax (VAT), saying that it took a decision to protect future generations. He spent a full three plus hours wrapping up debate on the 2018/2019 budget, which has found both the opposition and several government MP’s declaring that they cannot in good conscience support the government’s bid to increase VAT to 12 per cent from 7 .5 per cent come July 1st.
Free National Movement Long Island MP Adrian Gibson’s suggested the government forestall the hike until perhaps the third or fourth quarter of the fiscal year.
However, the government showed no signs of leaning in that direction.
The Prime Minister yesterday, sought to lay to rest arguments against upping value added tax.
His reason was that there are very few feasible options available within the timeframe required to fully address a fiscal gap of the country’s magnitude.
“We would have looked at doing nothing, what impact it would have had on our country, that was not an option. We would have destroyed our future generations, Minnis said.
“We would have looked at 10 per cent and the result was still not good for future generations, the result may have been good for us, but was bad for the future.
“We looked at 15, that was not an option, that is too much a pain for anybody to burden and we looked at 12 but we realized there would be some challenges even with 12, but we know how to overcome those challenges,” said the Prime Minister.
The 4.5 per cent hike in VAT is key to the government’s three-year plan to eliminate its arrears, provide the right budgeting for known commitments, funding for its socio-economic growth agenda, significant reductions in customs and excise duties in the second and third years of the plan and attain critical deficit targets.
The Prime Minister, however, accepts that a sharp contraction in economic activity, as a result of the VAT increase, is not inevitable.
“Any possible temporary impact needs to be weighed against the potential negative effects of not closing the fiscal gap and meeting the deficit target, thereby facing the prospects of further downgrades in our credibility and credit rating, he said.
“We should also not lose sight of the fact that the government has been mindful in the development of its plan to provide tax relief to the most vulnerable of our society,” he added.
