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MONDAY, NOVEMBER 1, 2021
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VAT cut’s ‘modest’ jobs, growth effect By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net CUTTING the VAT rate to 10 percent will cause “only slight improvement” in job creation and economic growth, a University of the Bahamas (UoB) study asserts, while advocating it still “be pursued’. The report, prepared by the university’s Public Policy Institute for the Ministry of Finance, also warned that the two percentage point cut planned by the Davis administration would worsen key fiscal indicators such as the fiscal deficit and debt-toGDP ratio. Adding that the tax cut would have no impact on reducing income inequality in Bahamian society, it
• UoB study warns on fiscal impact but says ‘pursue’ • Super Value chief backs 10%; impact to ‘balance out’ • Economy needs to grow 5% annually in next decade called for “compensating tax revenue initiatives” to offset the reduction in VAT revenue caused by slashing the rate from the existing 12 percent to 10 percent. However, no such measures have been announced by the new government. “Following a special request by the Ministry of Finance, a simulation exercise was carried out for changing the VAT rate,” the UoB report, part of
the former administration’s Bahamas Recovery and Sustainable Growth Project, said. “The simulations advanced a reduction of the VAT rate from 12 percent to 10 percent (scenario 19), and a VAT rate increase from 12 percent to 14 percent (scenario 20). “The objective of the simulation exercise was to estimate the implications for the economy, specifically the value-added real GDP, fiscal surplus/deficit,
debt-to-GDP, current account, inflation, unemployment, poverty level and GINI index.” The latter measures income and wealth inequality, and the study continued: “It was found that reducing the VAT rate by two percentage points, from 12 percent to 10 percent, shows only slight improvements in the real GDP, unemployment rates, prices and poverty levels. “There is, however, a worsening of the current account, the fiscal deficit and the debt-to-GDP ratio. There is no change to the GINI ratio. If the priority is to benefit the economy, if only slightly, the VAT reduction should be pursued.
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Gov’t urged: Fix price control approvals fast By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net SUPER Value’s principal is urging the Government to provide “instant” price control approvals to minimise cost of living increases, inventory loss and general supply chain disruption. Describing it as “a 50-year antiquated system that needs to be abolished”, Rupert Roberts told Tribune Business that the long wait to receive the go-ahead for price changes needs to “be fixed fast” given how rapidly costs and product availability are
RUPERT ROBERTS changing amid the global supply chain crisis. Revealing that permission for changes to price-controlled items is presently taking three weeks “at a
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Red Lobster franchise eyeing spin-off brand By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE franchise group responsible for bringing Red Lobster to The Bahamas is planning to launch a “smaller footprint” chain of seafood restaurants in this nation in 2022. Chris Mortimer, principal of Pinnacle Franchise Brands, which is the first Bahamas-based entity to successfully raise its target equity capital via a formal crowdfunding platform, told Tribune Business it plans to roll-out a take-out/delivery concept called Crustacean around the same time its first Red Lobster outlets open. “It’s smaller footprint, smaller location and allows us to be in a number of
locations where larger sitdown restaurants will not be able to go,” he explained of Crustacean. “It will be a take-out/delivery concept. We expect we’re going roll this out in those areas. There are a number of locations we are looking at. “We’re going to be developing that brand with Red Lobster. You should see them in other locations other than New Providence. We believe there are a few opportunities.” Mr Mortimer did not provide any specifics on Crustacean locations, the number of jobs that will be created or the investment involved when asked by this newspaper. He did, though, confirm that it will have a
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Insurers warn that VAT reversal ‘totally asinine’ By NEIL HARTNELL Tribune Business Editor nhartnell@ tribunemedia.net INSURERS have warned the Government it would be “totally asinine” to reintroduce VAT on residential homeowner premiums given that this will create a multi-million dollar hurricane liability for itself. Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business that the industry is seeking a meeting with the newly-elected Davis administration to clarify its VAT treatment of this product given that it potentially threatens to unravel a previous agreement it took both sides three years to negotiate. He spoke out amid significant confusion over the Government’s plans as it moves to slash the VAT rate to 10 percent by January 1, 2022. Michael Halkitis,
minister of economic affairs, last week said medical/health insurance will again be made VATable but Mr Saunders said this already attracted the levy - and only residential homeowners insurance is currently treated as VAT-exempt. The RoyalStar chief said if the exemption was removed it would potentially expose the Government to multimillion dollar VAT refunds payable to insurers on hurricane-related claims, something that the cash-strapped Public Treasury can ill-afford at this time. He noted that Ryan Pinder, the attorney general, would be well aware of these issues given that he was one of the lawyers who helped negotiate the current settlement on the industry’s behalf before being appointed to the Davis Cabinet. “The Government has not approached the
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