Go Lean Commentary
Governments need revenue in order to fulfill their role in the Social Contract.
Change has come to the Caribbean! The driver for this change is globalization. One agent of change is the World Trade Organization (WTO); their quest to liberalize international trade calls for the elimination of tariffs (Customs duties). Since this is the primary revenue source for most Caribbean governments, there is the need for new revenue options.
The below article highlights the “Value Added Tax” option, and its introduction in the Bahamas. This government is struggling with the implementation – change is hard! This issue had previously been addressed in Go Lean blogs:
- a. http://www.goleancaribbean.com/blog/?p=994 – Bahamas reject US WTO-Trade demands
- b. http://www.goleancaribbean.com/blog/?p=386 – Bahamas Debate: Was Prime Minister Behind On Tax?
The issues of government revenue reform, operational processing, and best practices for delivery are stressed in the book Go Lean… Caribbean. These issues are among the primary focus of the book, serving as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The following 3 prime directives are explored in full details:
- Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
- Establishment of a security apparatus to protect the resultant economic engines.
- Improve Caribbean governance to support these engines.
See the underlying news story here:
By: The Caribbean Journal staff
The Bahamas is planning to introduce a new 7.5 percent value added tax, the government announced this week.
The tax will be a single VAT rate across the board, although that is lower than an initially proposed 15 percent tax.
The country’s Ministry of Finance said the lower rate would also mean fewer exemptions.
The ultimate plan is for the tax to come into effect on Jan. 1, 2015, after what the government said would be an “in-depth public education campaign and private sector preparation.”
The Ministry of Finance also said it was proposing “VAT-inclusive” pricing rather than VAT exclusive, with the aim to “simplify price comparisons by consumers, especially when navigating between VAT registrants and non-registrants.”
“The price consumers see will always be the price they pay,”
The move will also mean that the hotel occupancy tax will be eliminated.
Government estimates predicted that the new VAT along with a basket of other fiscal provisions would increase the revenue yield of the Bahamas’ revenue system to 19.8 percent of GDP, up from 17.1 percent in the current fiscal year.
Christie said the goal with the mix of fiscal measures was to eliminate the “untenable structural imbalance between recurrent expenditure and revenue” by the 2015/2016 fiscal year, sharply reduce the GFS deficit by 2016/2017 and “arrest the growth in the government debt burden and move it onto a steady downward path to more sustainable levels.”
“I want to emphasize, at this point, that we are in no way engaged in unrealistic, pie-in-the-sky, wishful thinking on the score of fiscal redress,” Christie said. “With a keen eye on the state of our economy and mindful of the need to maintain and support its upward, forward momentum, we are embarked on a mutually-reinforcing plan of national development and fiscal consolidation that is balanced and measured. As such, our aim is set on gradual, though assured, progress on the fiscal front.”
The Bahamas would be the latest in a line of Caribbean countries to introduce a VAT; St Lucia was the most recent country to do so.
A value-added tax proposal by the United Kingdom government in Turks and Caicos was shelved last year after opposition from businesses.
Caribbean Journal Online News Source (Retrieved 05/30/2014) – http://www.caribjournal.com/2014/05/30/bahamas-planning-to-introduce-7-5-percent-value-added-tax-in-2015/
This roadmap commences with the assessment that the Caribbean is in crisis, and that this “crisis would be a terrible thing to waste”. Coupled with the external pressures for revenue reform, is the internal realities of societal abandonment – more and more of the labor pool has migrated to foreign lands in search of better economic opportunities – lowering the tax-paying base in the country. The book describes the sad state of affairs in Caribbean locales like Puerto Rico (Page 303) and the Bahamas 2nd city of Freeport (Page 112). As a planning tool, the roadmap accepts the challenge to adapt for the changes with a Declaration of Interdependence, pronouncing the need for regional solutions (Page 12). The statement is included as follows:
Whereas government services cannot be delivered without the appropriate funding mechanisms, “new guards” must be incorporated to assess, accrue, calculate and collect revenues, fees and other income sources for the Federation and member-states. The Federation can spur government revenues directly through cross-border services and indirectly by fostering industries and economic activities not possible without this Union.
The strategy is to confederate all the 30 member-states of the Caribbean, despite their language and legacy, into an integrated “single market”. Tactically, this will allow a separation-of-powers between the member-states governments and federal agencies, allowing for efficient economies-of-scale for revenue collection systems, processes and people. Yes, astute application of technology is cited as a key solution. In total, the Go Lean book details series of community ethos, strategies, tactics, implementations and advocacies to deliver new solutions:
| Anecdote Puerto Rico – The Greece of the Caribbean | Page 18 |
| Community Ethos – Money Multiplier | Page 22 |
| Community Ethos – “Crap” Happens | Page 23 |
| Community Ethos – Lean Operations | Page 24 |
| Community Ethos – Return on Investments (ROI) | Page 24 |
| Community Ethos – Cooperatives | Page 25 |
| Community Ethos – Ways to Improve Sharing | Page 35 |
| Strategic – Vision – Integrated region in a Single Market | Page 45 |
| Strategic – Vision – Agents of Change – Technology | Page 57 |
| Strategic – Vision – Agents of Change – Globalization | Page 57 |
| Tactical – Confederating a Non-sovereign Union | Page 63 |
| Tactical – Fostering a Technocracy | Page 64 |
| Tactical – Growing to $800 Billion – Trade & Globalization | Page 70 |
| Tactical – Separation of Powers – Union Revenue Admin. | Page 74 |
| Anecdote – “Lean” in Government | Page 93 |
| Implementation – Ways to Pay for Change | Page 101 |
| Implementation – Deploying Data Centers | Page 106 |
| Implementation – Ways to Deliver | Page 109 |
| Implementation – Ways to Better Manage Debt | Page 114 |
| Advocacy – Ways to Grow the Economy | Page 151 |
| Advocacy – Ways to Mitigate Black Markets | Page 165 |
| Advocacy – Ways to Improve Governance | Page 168 |
| Advocacy – Ways to Improve Local Governments | Page 169 |
| Advocacy – Ways to Better Manage the Social Contract | Page 170 |
| Advocacy – Revenue Sources for Administration | Page 172 |
| Advocacy – Ways to Foster Cooperatives | Page 176 |
All in all, the CU/Go Lean supports all governments’ efforts to collect legitimately authorized taxes.
Pay Caesar’s things to Caesar” – so declares the Go Lean book (Page 144), quoting Jesus Christ from the Bible at Mark 12:17. While Jesus Christ teachings are not portended to be economic lessons, this rendering in the roadmap posits that this and other bible teachings are economically sound. The Bahamas, the Caribbean country in the foregoing news article, lays claim to a Christian heritage. It is time for this country, and all the Caribbean, to “put their money where their mouth is”.
Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the changes described in the book Go Lean … Caribbean. The local governments need their revenues. They are part of the eco-system to elevate Caribbean life, culture and systems of commerce.