THE BAHAMAS for Caribbean Organization of Tax Administrators Belize 21 st – 24 th July 2008.
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Transcript of THE BAHAMAS for Caribbean Organization of Tax Administrators Belize 21 st – 24 th July 2008.
THE BAHAMASTHE BAHAMASforfor
Caribbean Organization of Tax Caribbean Organization of Tax AdministratorsAdministrators
BelizeBelize2121stst – 24 – 24thth July 2008 July 2008
“Impact of Trade Liberalization on a Modern Tax System”
The Bahamas PerspectiveThe Bahamas Perspective
byby
Ehurd Cunningham F.C.C.A.Ehurd Cunningham F.C.C.A.
Strategic Plan on Trade
Five principles that guide the strategic plan on trade
Designed to enhance the preparedness of the economy for success in an increasingly competitive international environment
Principles that Guide the Principles that Guide the Strategic PlanStrategic Plan
Ensure increased transparency in economic and government systemsEnsure increased transparency in economic and government systems
Form strategic international partnerships with nations within the Caribbean Form strategic international partnerships with nations within the Caribbean Community and the Association of Caribbean StatesCommunity and the Association of Caribbean States
Negotiate membership in the World Trade Organization to create new Negotiate membership in the World Trade Organization to create new markets for Bahamian productsmarkets for Bahamian products
Ensuring that investments and trade arrangements agreed and entered into Ensuring that investments and trade arrangements agreed and entered into serve the best interest of Bahamiansserve the best interest of Bahamians
Eliminate to the extent possible, bureaucratic requirements that reduce Eliminate to the extent possible, bureaucratic requirements that reduce transparency, contribute to delay and increase coststransparency, contribute to delay and increase costs
Safeguards
Injury to domestic industry producing like or directly competitive products
Disturbances in a sector of the economy particularly where the disturbance produces social problems
Raise enough revenue to finance essential expenditure without recourse to excessive public sector borrowing
Fiscal Summary 2008 /9 $ Million
1. Recurrent Expenditure 1,5692. Recurrent Revenue 1,574 3. Recurrent Surplus (1 minus 2) 5 4. Capital Expenditure 250 5. Capital Revenue 10 6. Capital Deficit (4 minus 5) (240) 7. Total Deficit (3 minus 6) (235) 8. Debt Redemption 70 9. GFS Deficit (7 minus 8) (165) 10. GDP (Current prices) 7,749 11. GFS Deficit as % of GDP 2.112. Government Debt as % of GDP 35.2
Policy decisions that have Implications for Trade policy
Trade in Goods:
Amalgamation of customs tariff and stamp tax
Simplification of tariffs (reduction in numbers of rates)
Eliminate multi-rates for similar items
Simplification of documentation, automating processes and use of scanners
(Continued)
Trade in Services:
– Creation of a one-stop investment agency
Intra-Regional Trade
Anticipated benefits to be gained
Bahamas trade with the region is miniscule (hardly exceeds one-half of 1% of total imports) Participation CSME may provide more
regional export opportunities not currently available
Trade with the United States
80 per cent of imports come from the US80 per cent of imports come from the US
Negotiations with the US must take into Negotiations with the US must take into account period to liberalise on the goods side of account period to liberalise on the goods side of trade, Tariff and Excise Tax regime trade, Tariff and Excise Tax regime
Administrative co-operation
Essential for the implementation and control of preferential treatments
Necessary to avoid irregularities and fraud
Customs and Legislative Procedures
Need to protect and facilitate trade through enforcement of and compliance with legislative requirements
Need to ensure that requirements for economic operators are reasonable
Need to apply single administrative document or electronic equivalent
Need to apply modern customs techniques, including risk assessment, and simplified procedures at imports and exports
Need for transparency
Implications for Revenue
Consider: Sources of revenue
Ranking of the revenue source
Elasticity of the revenue source
Impact on Government Revenue
Average rate of Customs duty was 35% but now 42%
Reduction in revenue would have to be replaced from alternative source
Action Plan
Determine the levels of imports and exports
Determine which items will be placed in the list of Excluded, Zero (no duty) and Phased Items
Availability of reliable statistical data
Action Plan (Cont’d)
Amalgamate stamp duty with Customs tariff
Introduce new Excise Act (apply equally to both imports and domestic production)
Review of duty free items Enhancement of revenue compliance
Enhancement of Revenue
Engagement of Revenue Compliance Officers
Use of information technology to block leakages in revenue
Improved customer service (Awareness of revenue implications)
Alternative Revenue Sources
Trade policy will bring about the need to address other issues:– Political acceptability– Revenue adequacy and stability– Revenue diversification– Economic neutrality– Administrative machinery
Possible Alternatives to Customs Duty
Areas being discussed in the public domain
Sales Tax
Value Added Tax
Conclusion
Policy on trade is a sensitive matter Every effort should be taken to develop a
modern and efficient tax system (avoid too many small tax systems)
Policy is often the art of the possible, rather than the pursuit of the optimal