The Bahamas will suffer another credit rating downgrade within the next six-nine months unless it “follows through” on Value-Added Tax (VAT) or some other structural revenue reform following the 2014-2015 Budget.
Dr Lisa Schineller, Standard & Poor’s (S&P) senior country analyst for the Bahamas, yesterday told Tribune Business that the upcoming May Budget had to include the Government’s plans for generating medium and long-term “revenue buoyancy”.
Suggesting that the national debate over VAT, and whether this is the best tax reform option, needed to be concluded relatively swiftly, Dr Schineller said S&P needed to “see something move on the revenue side this [fiscal] year”.
Don’t get me wrong. I am not one of those who is fundamentally anti-VAT or who believes that there is absolutely no need to reform the Bahamian tax regime. I am not a knee-jerk no-taxes person; indeed, I believe that taxes are critical to maintain a contemporary society, where all citizens have access to the basic services that are necessary for twenty-first century life, and I also believe that to do away with taxation is to create a society that will resemble the world on which the Americas was built–a profoundly unequal world, where profit and wealth for a few rested on the backs of many who were underpaid (or not paid at all), under-fed, ill, poorly housed, abused.
I do not see that much good can come out of any agency who stands far away, has nothing invested in the society, and who simply goes around the world, peering into people’s business and recommending solutions that have been developed for other social realities with other challenges. The approach seems to be both cavalier and dismissive, and the goals are unrealistic. While I would be the first person to agree that government spending is in dire need of adjustment, I am also part of an institution, the College-soon-to-be-university of The Bahamas, which is under real threat from indiscriminate cuts in government spending. It is institutions like the College on which future revenue streams, future real economic changes will be built, if the government invests in those institutions; but the pressure being applied by companies like S&P and others is having the opposite effect. What The Bahamas needs are not more experts from the outside who come along with solutions that treat us as though we are cookies cut from some other reality, as though the unique challenges posed by being a large sprawling, unevenly developed postcolonial archipelago can be solved with plans developed in post-war France or approved by the OECD under the terms of the WTO. I don’t need to watch films like Life and Debt to guess what might happen next.
Once again, don’t get me wrong. I am not arguing that changes do not need to be made. I am not making any case whatsoever that the system we have at the moment is working. What I am suggesting is that the carrot-and-stick approach being used by those who pay too much attention international credit ratings agencies–who are not gods, even though they behave as though they are, and even though they have the power to affect our economic fortunes as we let them–is too reminiscent of the indiscriminate tactics of the plantation and of the colonial settlement, where the bottom line is more important than the damage involved in getting there for my liking.
I can only refer people to Achebe’s classic work, Things Fall Apart for one of the best illustrations of what can happen to a society where necessary change is imposed from the outside, rather than developed internally. It’s a story that has been repeated again and again over the last five hundred years in our part of the world, especially with regard to societies made up of people whose skin colours once marked them out as less-than. There is a hollowness that attends on these kinds of changes, most of which spring out of a deeply entrenched sense that–contrary to the evidence of history–people from the developed world know what’s best for people in the developing world. We need to beware the White Man’s Burden, which remains alive and well in the twenty-first century global economy; that burden has a bad habit of being dropped and breaking everything that’s inside.