From today’s paper
Mr Simmons also recommended an increase in taxes — including incorporating a value added tax (VAT) on all goods and services.
“From everything from dentist visits to restaurants,” he said. “What that does is broaden the tax base from $1 billion to as much as $2 billion. VAT is a more efficient way to tap into economic activity. Shared sacrifice should require people selling goods and services (to) pay.”
He also offered the idea of a corporation tax. The model in Bermuda, he explained, is that corporations are taxed on size and type of business, not profits. “That is something (the Government) is going to have to deal with.”
Normally I agree with many of Economist Craig Simmon’s opinions, this time I completely disagree. A VAT tax would be a disaster, as would a corporation tax.
A VAT tax while nice in theory is incredibly difficult to implement. Just ask the Bahamas. They’ve been planning a VAT implementation for some 5+ years and have required the expertise of some of Revenue Canada’s top consultants. Bermuda doesn’t have 5+ years to figure out how to implement a VAT tax.
A corporation tax? Wait, the absolute last thing we want to do is actively using taxation to discourage businesses of a certain “size”. I would however wholly support increased fees or taxes for any non-Bermudian owned “brass plate” entities with no physical presence other than a mailbox. They do far more damage to our reputation and good and we could at least look to these as a source of revenue.
If we want to cut government size and costs we need to cut bureaucracy, not add to it. One thing we could be doing is simplifying the duty system into either a fair tax or a vastly simplified tier system. It is far too complex with a great many concessions which don’t make a great deal of sense.