Charging that the Davis administration must give priority to helping struggling Bahamian families deal with rising costs, the Free National Movement (FNM) yesterday called for the government to present a strong and definitive plan to counter the effects of inflation and to execute a credible and robust fiscal and economic plan.
Last week, the Bahamas National Statistical Institute (BNSI) revealed that the All Items Index for June 2022 recorded a 6.2 percent surge in the cost of frequently used goods and services in The Bahamas, compared to the same period last year.
The impact of inflation remains a growing concern for many Bahamians, as gas prices have soared to record highs.
In a statement yesterday, Opposition Shadow Minister of Finance Kwasi Thompson said this historically high inflation rate is creating significant hardship for Bahamian families, especially working families on a fixed income.
“Bahamians have seen how other governments in the Caribbean and around the world have taken prompt and impactful steps to reduce the impact of inflation. Governments have temporarily capped or eliminated gasoline taxes. They have expanded the list of VAT-free products. They have provided even more vouchers and help for working families and businesses,” he said.
“The Davis administration has been twiddling its thumbs, just now finally realizing this week that it ought to consider a tax break on gasoline, when we in the FNM had recommended this same thing and much more months ago. When we made the recommendation they claimed that it couldn’t be done. Now that gas prices have finally started to come down, they just now realize that Bahamians need a break on fuel tax to combat the massive spike.”
Prime Minister Philip Davis said last week that the government was still sorting out tax relief measures for retail petroleum dealers, in an effort to lower the price of gas and have those savings passed on to consumers.
Additionally, the prime minister has said he has brokered a deal with at least one shipping company for a 40 percent reduction in shipping costs.
And although the government earlier this year reduced the rate of value-added tax (VAT) from 12 percent to 10 percent, it placed the tax on previously VAT-free breadbasket items.
However, in the most recent budget exercise, the government lowered the customs duty on a plethora of food items and goods.
“They must explain to the Bahamian people how they can now consider a reduction in VAT on gas, but refuse to do the right thing and eliminate VAT on breadbasket items and medicines, given how the prices of these essential items have shot up due to inflation,” the FNM said. “When will the Davis administration finally accept that, as other countries have done, it is critical to remove VAT on essential items in order to protect struggling families throughout the country?
“Further, we once again call on the government to announce the dates for the annual back-to-school VAT holiday that was started by the FNM. Working parents will need the savings even more now that the prices of virtually everything have gone up. If you will take VAT off gasoline, do the same for breadbasket items and medication. Provide assistance to struggling small businesses through the Small Business Development Center or the one-time purchase of inventory VAT free.
“We hasten to point out that the FNM believes in fiscal responsibility. Thus all of these necessary tax relief measures must be paid for through additional revenue measures or reduced spending. Thus to cover the cut in the gasoline tax and the elimination of VAT on essential items, we call on the government to put back in place the 12 percent VAT on real estate over $2 million, when that tax cut only benefits wealthy Bahamians and foreigners.”
The opposition said the government should also postpone its recent tax cut on yachts, and eliminate the $4 million increase in the international travel budget, reduce the $30 million allocation for consultants, and scale back planned spending for events, entertainment, and other non-essential items.