Nassau, Bahamas - The following is a Statement from the Office of the Leader of the Opposition:
I wish to respond to press comments attributed to Prime Minister Minnis in defence of his decision to raise the VAT rate from 7.5% to 12%.
The Prime Minister blamed the threat of devaluation of the Bahamian dollar, a monetary and credit policy issue, for raising taxes to defray the government’s day to day operational expenses, a purely fiscal policy issue. Monetary policies are in the purview of the independent regulatory agency, the Central Bank of The Bahamas
He said the following: "I do not believe we can tax or borrow our way out of debt. They call me a hypocrite for increasing Vat to 12%. If we did not we would be devalued within a year.”
Beyond my surprise that the Prime Minister was pre-empting the Governor of the Central Bank who never raised that alarm, I am amused that the Prime Minister is contradicting the Finance Minister's Budget Communication which boasted of 23 weeks worth of foreign reserves. There is no issue of devaluation in the offing. To suggest it is irresponsible, stupid and a lie.
Anyone with a modicum of sense knows that devaluation as a policy instrument makes no sense in a country like ours that trades in services with 90 per cent or more of the inputs paid for in U S dollars. We would be deliberately shooting ourselves in the foot.
So Prime Minister Minnis, try another line because this one on devaluation is a flop.
How about telling the truth, the FNM does not know what it is doing; they have mismanaged the country's affairs and now want to blame the PLP. No lie can last forever.