Taxes: Every Bahamian's Burden

First Published: 2005-07-07

"The immense and ever increasing sums which the state wrings from the people are never enough for it; it mortgages the income of future generations, and steers resolutely toward bankruptcy"

This quote from anarchist P.A. Kropotkin, although from 1884, strikes a familiar chord in today's Bahamas, and becomes all too familiar with the annual presentation of the Government's Budget to the House of Assembly.

During this time of year Members of Parliament wax eloquently, and sometimes, not so eloquently, about the value of the services provided by the government and how much more money is needed to fund every Bahamian's desire.

The following charts from The Central Bank of The Bahamas show the country is heading toward bankruptcy. If the sound and fury coming from Parliament in recent weeks is an indication, this situation will be worse, with the National Debt (government debt plus contingent liabilities) fast approaching 45 percent of GDP…a country's debt danger zone as reported by the IMF and other agencies that monitor government debt throughout the world.

It is also important to note that Government's portion of the National debt is an accumulation of past deficits, and continuing to incur large deficits will result in further growth of the debt, and increased taxes usually follow.

What should also be of concern is the now pervasive refrain that the country needs to implement a progressive tax system. Of course taxation is never progressive in what ever form it takes. Taxation is government taking money from the citizens to fulfil a perceived need. The country should not be taken in with the flowery statements. So-called "progressive taxation" sounds good, but, if history is a good teacher, it will be used to extract more money from citizen's for more hopelessly inept government programs.

From 1991 through 2004 the combined debt, and contingent liabilities have increased a staggering average of approximately 10 million dollars per annum. And the taxpayer has been forced to bear the burden of consistent tax increases. So to reduce borrowing, and the need for more taxes, government must stop spending what it does not have. On one hand, officials complain about consumers borrowing above their means and threaten to pass laws to set limits to personal borrowing. Yet on the other hand, government debt appears to have no limits.

Measures to slow spending might include rollbacks in MP's and Cabinet Ministers salaries and perks like cars, chauffeurs and first class travel etc. Wouldn't it be a great example to see Cabinet Ministers driving themselves to work? How about charging user fees instead of taxes for things like education and other government "services"? And, implementing Minister Mitchell's plan to reduce the public payroll would also help.

What about BahamasAir, Water & Sewerage and other public corporations that lose large sums of taxpayer monies annually? Subsidies to government corporations and private businesses and farms should also cease immediately. If these services and businesses cannot fund themselves they should go out of business.

To emphasise this point, if BahamasAir was privatised or closed, the country would no longer have to subsidise them to the tune of $18 to $20,000,000 dollars each year. All things being equal, the debt should decline between $10 to $20,000,000 per annum without this albatross.

As Thomas Jefferson suggested in his letter to J.W. Eppes, United States Representative and a Senator from Virginia, in 1813:

"Taxes should be continued by annual or biennial reenactments, because a constant hold, by the nation, of the strings of the public purse is a salutary restraint from which an honest government ought not to wish, nor a corrupt one to be permitted to be free."

These few steps will begin to save the country from its march toward bankruptcy.

In addition, citizens should be wary of Parliamentarians who insist businesses are unfair to the consumer when prices rise, while they sneak tax increases through in the dead of night without the least bit of concern for the pocket books of the Bahamian taxpayer. At least with businesses, if prices are too high, there are other alternatives. Consumers can shop elsewhere, but with taxes, there is no alternative. According to numerous laws, you pay the taxes or face the consequences of fines, a jail term or both.

In summary, if the government does not stop spending what it does not have, every Bahamian, no matter the rhetoric, will have to pay higher taxes.

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