1. The Bahamas Presentation at Bay Gardens Hotel Castries, Saint Lucia 24 th July 2006

2. Caribbean Organization of Tax Administrators Innovative Tax Policy for a Developing Economy: The Bahamas

3. Summary of Revenue Actual 2004/2005 $ Forecast 2004/2005 $ Actual 2003/2004 $ Import & Excise Duties 425,356,061 479,122,000 422,648,348 Real Property Tax 53,890,825 62,500,000 37,809,861 Motor Vehicle Tax 24,996,563 27,747,557 19,918,460 Gaming Tax 25,175,502 25,953,952 13,522,586 Tourism Tax 94,286,174 88,347,296 94,218,594 Stamp Tax 247,788,628 183,659,057 189,096,862 Company Fees 20,138,152 24,886,860 21,339,357 Bank & Trust Company Fees 10,450,302 11,500,000 5,619,250 Insurance Company Fees 15,058,097 11,939,497 11,008,611 Other Taxes 1,177,501 1,697,408 979,034 Total Tax Revenue 918,317,805 917,353,627 816,160,963 Fees & Service Charges 102,226,840 93,957,339 96,662,432 Revenue from Gov’t Prop. 16,093,566 14,568,169 30,682,367 Interest & Dividends. 10,908,653 18,101,000 9,705,530 Reimbursements & Loans Rep. 293,417 606,500 363,662 Service of a Commercial Nature 565,503 7,413,365 6,794,898 Total Non-Tax Revenue 130,087,979 134,646,373 144,208,889 Total Revenue 1,053,496,185 1,052,000,000 960,369,855

4. Tax Policy Consider as part of fiscal policy Level of capital and recurrent expenditure Role of the Cabinet Short, medium and long term benefits

5. Projected Annual Deficit Policy decision on : –Recurrent Expenditure –Capital expenditure –Recurrent Revenue –Borrowing / Loans / Grants

6. Annual Budget Communication Announcement of Government’s programme for the next fiscal period Announcement of any new taxes or amendments to existing tax rates Incentives

7. Absence of Standard Mechanism No income tax No Corporation Tax Policy is therefore not related to varying factors such as deductables, allowances or credits

8. Enhancement in administration of existing revenue legislations Improvements to administrative mechanism Reduction in leakages Improved accountability and transparency

9. Administrative Measures Implementation of A Trade Information Management System (TIMS) in the Customs Department (Identifies situations where Customs revenue might be at risk) Amendment to the Stamp Act (Close the loopholes for tax avoidance)

10. Administrative Measures (Cont’d) Amendment to the Business Licence Act (Temporary Business Licence) Bank and Trust Company Fees (Fees now based on Volume of assets ) Passenger Tax (Departure Tax added to cost of ticket)

11. Reporting Format Daily report Monthly reports Adjustments to previously approved expenditure

12. Enhancemet to systems Cash receipting Improved technology Payments by credit cards Development of E-Government

13. Taxpayer Services Improvements to availability / convenience to pay Simplification / clarification of documents and forms Special arrangements e.g Real Property Tax

14. Use of Legislation To enhance: –Administration –Acceptability –Adequacy and stability

15. Enforcement of Compliance Engagement of Revenue Compliance Officers –Undertake analytical work –Equip policymakers with data by which informed decisions could be taken

16. Investment Incentives Exemption for capital projects designed to stimulate economic activity –Direct employment –Entrepreneurial opportunities

17. The Way Forward Less dependant on Customs duty Feasibility of introducing VAT –Report by the IMF –Study by Crown Agents