The official Opposition Free National Movement (FNM) has been relentless in its attacks on the Davis Administration of breaking its promise not to introduce new taxes.

The opposition has accused the Davis Administration of disguising new taxes as fees and most recently the FNM Deputy Leader Shannendon Cartwright in a statement said the Davis Administration’s “tax and spend policy is killing Bahamian Families.” this after a study by students at the University of The Bahamas revealed that middle class families in The Bahamas need a monthly income of over $10,000 to live comfortably, while working class families needed over $5,000 per month to live comfortably.        

Some people were also thinking that the newly passed Domestic Minimum Top-up Tax Bill would be another burden on Bahamians.

During his contribution to the Top-up Tax Bill Prime Minister Philip Davis who led the debate vehemently rejected claims that his administration had over taxed the people. 

He said, “this administration has pledged not to introduce any major new taxes to place a further burden on the Bahamian people. I wanted to start this debate off by providing clarity on the purpose of this Bill because there are those who would use the mere mention of the word tax to sow seeds of confusion and spread fake news.”

Mr. Davis said the fact is that the vast majority of Bahamian people have experienced lower taxes in the past three years.

He said, “we lowered customs duties on a wide range of healthy and nutritious dietary staples, construction supplies, and a number of essential goods. We lowered VAT from 12% to 10% – a 20% reduction. That is in contrast to the 60% increase from 7.5% to 12% under the FNM.

“And we increased the threshold for paying real property taxes from $250,000 to $300,000.  Many property owners whose properties were valued between $250,000 to $300,000, benefitted from this move and now pay $0 in real property taxes each year. The common thread connecting all of these reductions is that they benefit a wide cross-section of Bahamians, particularly lower-income and middle-income Bahamian families,” said Prime Minister Davis. 

As it relates to revenue collection the Prime Minister said his administration has targeted strategic areas for increases and they have enhanced enforcement.

“For example,” he said, “Owners of yachts are paying a bit more in fees to cruise around in our beautiful waters. And local businesses that were avoiding paying customs duties or real property taxes now have to pay up.  Our main method to generate increased revenues has been improved enforcement and collection. 

“Now, I know when we use the word enforcement there are some who try to portray it as a scary word. But enforcement simply means that we’re ensuring everyone follows the law. Most Bahamians don’t mind because they actually follow the law when it comes to taxes,” he said.

The Prime Minister argued that everyday people do not have the means to avoid paying taxes.

He said, “The single mother living over-the-hill doesn’t get to go to the grocery store and say, “I don’t think I’ll pay VAT today.  The father who took his family on vacation to Miami doesn’t get to just skip paying customs duties. He knows his bag will be searched as he passes through customs and he better not get caught falsifying the numbers.

“So, who is exactly is it that is afraid when they hear the word enforcement? Who is it that has their paid mouthpieces going around attempting to spread misinformation about our enforcement activities? The answer to that question can be seen in their actions,” said Mr. Davis.

With a focus on real property taxes the Prime Minister said about 70 percent of the hundreds of millions of dollars owed in real property taxes is owed by second homeowners. 

He said, “These are non-Bahamians who often own a vacation home or winter home here in The Bahamas. For some, we function as their “home away from home” when they want to escape to paradise.  Others use their second homes as income generators, renting out their properties to locals and visitors alike.

“Why is it that, for decades, we allowed many of these second homeowners to not pay their taxes?  I don’t know if it makes sense to y’all, but it doesn’t make sense to me. There is a patent unfairness in enforcing tax policies on the poor and middle class but allowing the wealthy to pay when they feel like it,” he said.

According to the Prime Minister from day one his administration resolved to make it clear that no one is above the law and everyone must pay their fair share.

He said, “The people who are afraid of the word enforcement are people who want the status quo to remain in place.  I’m sure we all remember when the previous administration announced its intent to generate more revenue from real property taxes. They were big and bold with their announcement.  Then, one single letter arrived from that gated community out west. The homeowners in that community said they would pack up their bags and leave if the government touched real property taxes. The very next day, the Minnis administration, walked their announcement back with their tails between their legs.

“Now, fast forward a few years to when this Administration announced enhanced real property tax enforcement measures, as well as a nationwide revaluation. We faced the same kinds of threats. But we did not back down. That’s not our style. Not when we are creating a fairer system for everyone. We implemented the changes like we said we would, and you know what? Those homeowners are still here today. They didn’t leave. And the real estate market didn’t crash either. It is booming,” Davis boasted.

He said, most importantly, everyone now understands that they must pay their fair share.

“The truth is the average person doesn’t mind paying taxes as long as they feel empowered, the tax regime is fair, and there are clear results indicating where their tax dollars are going,” said the Prime Minister.

“People want to see improvements in areas like education and national security. They want to see new programmes that help people like the National School Breakfast Programme. They want to see improved fiscal responsibility like we’ve seen in the past three years when the debt-to-GDP ratio dropped from over 100percent to 82 percent.

“They want to see progress toward a balanced budget, which we are still on target to deliver after fixing the fiscal mess that the Minnis administration left behind. People don’t mind paying taxes to an effective and responsible government. Because everyone knows the government needs revenues to run. We just want our money managed properly,” said the Prime Minister. 

Prime Minister Davis claimed that when his administration took office three years ago, the nation was struggling to climb out of an economic and fiscal crisis brought on by the FNM’s mismanagement. 

“Since then,” he said, “We’ve made clear and substantial progress to improve our financial standing through enhanced efficiency and effective financial management, as well as through identifying new ways of increasing revenues. We are fixing our predecessors’ mess while establishing a new standard for government efficiency and effectiveness.  The Bill before us today represents another avenue for generating significant revenues that will be realised without placing a burden on Bahamians.”

The Domestic Minimum Top-Up Tax is a corporate income tax, applied to multinational entities in The Bahamas with an annual turnover over 750 million Euros (800 million USD).

“In introducing this tax on multinational entities, we are taking part in a major global change, as 140 other countries have signed up in agreement with the Organisation for Economic Co-operation and Development (OECD) on a global minimum corporate tax.

The agreement calls for a 15 percent tax on the turnover of multinationals for the fiscal period beginning 1 January 2024 – although some companies may apply for an extension until 2025 if they are newly impacted by this tax.