DIANE PHILLIPS: Corporation tax will be the next test, even if we already pay more VAT and customs duties

Forty-nine is behind us, the flags, the parades, the retreats, the beer, the barbecues and the day at the beach are memories. Now we are preparing for 50. We will wave bigger flags with more enthusiasm, wear brighter colors, sing louder, celebrate more. But no matter how much we shout 50 years of independence, the reality is that if we mark half a century of enjoying our independence with a capital I, we have to ask ourselves, how independent are we really with a little i?

Surely we have every reason to celebrate 50 years of liberation from colonial rule. But as we celebrate five decades of self-government, we need to be honest about the leeway we have in many of the most important decisions we make.

Look at what happens when the pressure is really on corporate income tax.

Let me say up front that I am – under certain conditions – not opposed to corporation tax if other fees, including obscene business licenses and customs duties, are significantly reduced or eliminated. The current regime of three taxes – business license, customs duties and VAT – is unsustainable.

Corporate tax offers an opportunity for reform, replacing onerous fees with a single known factor.

What cannot happen is that a corporate income tax is imposed on top of other taxes. You can’t impose four taxes on the same income without causing hardship for businesses, many of which are already struggling to keep their doors open and their staff open, without making them think twice about continuing to operate. You cannot impose four taxes on the same product or service without raising the cost of living so high that you further threaten the survival of the middle class.

But taxes, once imposed, are harder to eliminate than an in-laws who have nowhere to live.

Last year, when we were all focused on the hunt for the devil called COVID, some 136 countries came together and signed a global tax deal setting a minimum tax rate of 15% for large multinational corporations and obliging them to pay taxes in the countries where they actually do business.

The Bahamas was not one of those countries, but one of 15 holdouts that the IMF says are costing governments $500 billion or more a year in tax revenue that would have been billed if companies hadn’t not been registered or domiciled overseas in places like this country, Anguilla, Cayman, etc.

Faced with the looming reality of corporate income tax, there are steps we can take to mitigate and win with the little wiggle room we have. First, we can negotiate the rate. Despite the 15% call, we can leverage the compliance lens by starting at 12.5% ​​as other jurisdictions have done with a gradual increase as other taxes are reduced or removed .

Few would oppose tax reform. The coexistence of customs duties and VAT is a hellish marriage for all businesses. Given that VAT requiring independent accounting is easier to manage and customs has a history of corruption, the choice seems clear.

To offset the funds now raised through the toxic combination of fees on businesses, there is an opportunity to increase the fees associated with the very wealthy person who enjoys living in the Bahamas and will not be deterred from doing so by a gradual increase in property. real estate. Tax for homes valued at $12 million or more. Progressive note.

Optimize the permanent residency regime to include oversight ensuring that the practice of buying a condo, obtaining residency and flipping it for profit ceases.

You can argue against corporate tax all you want on principle. Everyone loves the thought of the little guy standing up to the bully. But in this David and Goliath play, Bahamian businesses are already losing. Corporation tax in the US is 21%, the UK is 19%, but with an increase later this year, Cyprus and Ireland reach 12.5% ​​and businesses in the Bahamas pay more 30% with the three existing taxes – business license fees, customs duties. and VAT.

Ultimately, the cost of goods sold will be better controlled under a new tax structure and the winner will be the consumer. The truth isn’t easy to digest but that doesn’t make it any less true.


Organic farmers – and proud of it

When the Agricultural Development Organization (Bahamas) was launched in January, the new nonprofit said it wanted to strengthen food security in the country by restoring a culture and a love for agriculture.

ADO meets the couple behind Abaco Neem.

If a husband-wife team ever symbolized love for farming, it’s these two. Their names are Nick and Daphne Miaoulis. You may be familiar with their most well-known product, Abaco Neem, but you’d be surprised what else they grow, including over 107 varieties of fruit and flowering trees. There is hardly a specimen of fruit or flower or product that they do not grow. Tomatoes as fat, red and ripe as you will ever see them. Greens so fresh you feel healthier just looking at them. Berries so juicy you can feel the liquid running down your chin. There are bees in abundance and honey and every hour of every day there is something to be done to ensure that God’s green earth continues to produce what the hands of Nick and Daphne and their assistants have sown, planted, plowed and cultivated.

Nick started the farm 30 years ago with 800 Neem plants on 25 acres of leased farmland. Abaco Neem remains the only certified organic farm in the country. Today, the farm has some 8,000 trees and 120 cultivated acres. Nick and Daphne continue to hope for a Crown land grant, wanting to claim the land they’ve loved for three decades.

“The majority of our trees are neem, coconut, lemongrass and aloe, all of which are used in the making of our products,” Daphne explains. Much of what they do is labor intensive, sometimes backbreaking. The comeback after Dorian took every ounce of strength. After having to close their retail store in Marsh Harbour, they moved to a trailer on the farm itself, becoming as self-sufficient as possible.

“Over the years, our passion has not waned… We are proud Bahamian farmers,” Daphne tells me.

ADO – if you want to learn more about agriculture, Nick and Daphne could be your posters.

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