In a country report captioned 'The Bahamas- Tax Reforms for Increased Buoyancy', IMF has advised this Caribbean country to " consolidate the various individual concession acts into a single fiscal omnibus act."

The Report's other recommendations include : use tax incentives sparingly and then only in situations where they address market failures or generate multiplier effects such as infrastructure development; withdraw the power to issue discretionary incentives; impose a sunset clause of no more than five years for all tax incentive legislation in order to analyze whether incentives are achieving the intended purpose and decline requests for extending concessions granted under the Hotels Encouragement Act.

The Report says: "The Bahamas is characterized by a low tax effort due to resource mobilization from a tax system that ignores income as a tax base. This is already an attractive feature but there is an elaborate regime of discretionary tax expenditures available that grant tax holidays and tax concessions for basically every sector in the economy."

It continues: "The revenue foregone cost of import duties alone is close to 3.6 percent for the last fiscal year. This is becoming fiscally unsustainable and the mission prepared simple steps toward tax expenditure budgeting. It also provides arguments against rent seeking behavior in the tourism industry and a blueprint as to the rationalization of incentives.

It points out that the country has a low tax effort due to limited tax handles and underutilization of available ones . The current issues to be addressed include lack of buoyancy of the tax system; dependence on 94 fees and levies that are distortionary and cascading; narrow tax bases through exemptions and concessions; decline in collection efforts in property taxation and over-taxation of goods relative to services.

The government plans to raise the revenue/GDP ratio to 21.5 percent by FY-2016/17 from its current level around 17.5 percent, a 4 percentage point increase to address the rising public debt and fund much needed infrastructure projects . Revenue mobilization is expected through the introduction of VAT and other base broadening measures. In addition to introducing VAT as a source of revenue, property tax system will be reformed, excise tax rates on cigarettes will be changed from ad valorem to specific, and stamps introduced.

Though the report is dated June 2013, IMF released it only on 28th January 2014.