THE END OF AN OLD ERA
FEAR, VICTIMIZATION, INTIMIDATION and DEPRAVATION
Value-added tax (VAT) the biggest deception of a people in modern times. VAT raised the cost of
living, increasing crime, sluggish economic growth, high unemployment, especially among our youth.
7.5% VAT in the Bahamas, was touted, that revenues from the VAT would eliminate the nation’s
chronic deficits and national debt, now at $8.6 billion and climbing. But guess what? Now VAT is at
12% and the economy and employment are still struggling in the Bahamas, and the budget deficit is
escalating. The lesson is clear: Increases in tax revenues do not necessarily reduce the debt — they
only allow the government to spend more, and, in the case of a VAT, raise the cost of living for local
The Bahamas is a tax haven and attracts wealthy foreigners. There is no tax on income,
capital gains, interest or dividends. But the cost of living is high for all Bahamians due to
the high import duties and now the 12% VAT. The tax burden is largely imposed on the
poor and middle class. The Bahamas also has imposed restrictions on foreign currency
exchange, which is not helping the country grow economically.
Bahamas Exchange Controls
The Bahamas Exchange Control serves no purpose other than to enhance the power of
government officials and let the central bank play games with the local currency.”
The Bahamas imposes strict exchange controls on its citizens, (and less so on foreigners
as it is difficult to keep a leash on people who can easily leave the country).
Essentially what it says is that private Bahamians do the work in getting foreign
currency, and then must fork over that money to the government statists who decide
what is done with their money. The truth is that a government does not, cannot, and
should not “plan” economic activities that are not beneficial to the citizens of the
Bahamas and only foreign interest–those activities should be left to individuals in a
free-market, i.e., entrepreneurs and capitalists. Government’s job is not to plan our lives
— whether personal or economic — but to protect our rights so we can plan our own
lives. All that is required of government is to protect individual rights, including property rights, which is precisely what the exchange control rules violate. The KGM
government will be a facilitator of economic growth and activity.
The Bahamian Government’s decision to continue to maintain Exchange Controls after
the dissolution of the Sterling Era, reflected a desire to ensure disciplined use of the
country’s foreign currency reserves and to assist in its Balance of Payments. Such
concerns were understandable given the structural character of the economy–a small,
open, developing, export-oriented economy–whose export sector is dominated by
tourism; the Government’s goal of economic diversification, and the funding
requirements of such diversification.
Tourism provided then, as it does now, most of the
foreign exchange needed to play an important role in funding the import requirements
of the economy and, in the absence of a strong agricultural and industrial base, there is
high reliance on imports for consumption and capital development. This will change
under a KGM led government.
The Bahamian dollar is on par with the U.S. dollar (though it sells at a discount in
Miami, Fl). Bahamians are virtually prohibited from investing outside the Bahamas (for example,
investing in the stock market in the United States and other countries)–surely a policy
that even Britain abolished several years ago. Why should the Bahamas government fear
its own citizens investing in the United States–doesn’t that say something about the
stability of its leaders? The exchange control law will be abolished in a KGM led
In a free country, the proper policy in regards to holding and keeping currency would be
as follows: if you obtained your money (whether U.S. currency, or otherwise) morally,
without violating the rights of others (that is, not through theft or fraud) you have the
inalienable right to invest and dispose of your money — your property — as you wish (so
long as you do not use it to violate the rights of others). Under the KGM government, the
laws would be set in place so that government officials would be forbidden — under the
penalty of fines and imprisonment — from using police powers to control your money
that you — and not they — worked for.
In other words in a free country exchange controls would not exist; because,
economically they cripple the economy, politically they are a violation of individual
rights, and morally as — an initiation of physical force — they will not be acceptable in
the NEW & NEXT BAHAMAS.