Monday, September 30, 2013

Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC), and the Value Added Tax (VAT) debate in The Bahamas

Tax Coalition Not Out To 'Kill Vat'

Tribune Business Editor
Nassau, The Bahamas

The Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) proposed tax reform committee is aiming to bring “more leadership to the debate”, its chairman emphasising: “This isn’t a Coalition to kill VAT.”
Chester Cooper told Tribune Business that the BCCEC was keeping a “very open mind” on the direction the Bahamas should take, telling Tribune Business that tax reform in this nation was inevitable.
Providing more details on the BCCEC’s ‘Tax Coalition’ plans, first revealed by this newspaper last week, Mr Cooper said its purpose was effectively to ‘bridge the gap’ between the Government and private sector when it came to educating and informing the latter on VAT and other tax reforms.
He added that the Tax Reform Committee would also “examine the fundamentals” of the Government’s VAT proposal to see whether it was the best tax reform option for the Bahamas, of if a revised version - or entirely different tax - was the best option.
And Mr Cooper also acknowledged that the Committee was intended to “calm the hysteria” that had arisen over VAT and the Government’s wider tax reform plans, given that most commentators and statements on the issue were vehemently opposed to the proposals.
“In a nutshell, over the past several weeks, we have become a little concerned about the level of debate on the issue of VAT, and the level of criticism,” Mr Cooper told Tribune Business.
“We want to see this [the Committee] bring more leadership to the debate, organise and elevate it.”
Acknowledging that the Government had begun to ‘ramp up’ its VAT educational initiatives, via speeches and presentations, Mr Cooper said the proposed tax reform committee will be co-chaired by Robert Myers, the BCCEC’s vice-chairman, and PricewaterhouseCoopers (PwC) Bahamas accountant and partner, Gowon Bowe.
Its objective, he added, was to “bring together a broad private sector coalition” featuring all key industry associations in an effort to engage both the Government and private sector, analysing VAT’s likely impact on both the overall economy and individual sectors.
Mr Cooper promised that the Committee would “really look at the facts and fundamentals of what is being proposed, look at it scientifically, and look at the impact on some of the sectors”.
It will also arrange a series of meetings with sister Family Island Chambers, industry associations and their members, in collaboration with the Ministry of Finance, to educate them and explain how VAT will impact their businesses.
“By and large there’s been a bit of a feeding frenzy coming out and opposing VAT,” Mr Cooper told Tribune Business.
“We [the BCCEC] believe in national tax reform. When the rating agencies downgraded us were dismayed by that. We want to have fiscal prudence, but want the Government to have enough revenues and exercise restraint in spending.
“We expect, at the end of the day, to have a balanced, equitable tax structure, whether its VAT in its current form or revised form, or a new form of tax altogether.”
The BCCEC chairman added: “I think it’s important we find a way to calm the hysteria a little bit, and have a productive, mature discussion that provides leadership from the private sector in that regard.
“This is not a Coalition to kill VAT. I don’t want the public to get any form of impression, or the Government to get its back up, that this is a Coalition to kill it.
“If it happens, at the end of the day, that all the Associations and people we talk to are opposed to VAT in a very drastic way, because it’s detrimental and their analysis shows the impact is negative, we might take that position. At this point, the Chamber is very open-minded.”
The VAT debate has intensified since the Nassau Institute economic think-tank published the results of its study, which showed that the implementation of such a tax would cut Bahamian GDP by between $322-$483 million annually.
That sparked senior Ministry of Finance officials and consultants into lining up to slam the report’s findings. One, former PwC senior partner, Ishmael Lightbourne, last week blasted the Nassau Institute’s study as “one of the most extreme, ridiculous and exaggerated” reports he had ever seen.
Mr Cooper, though, pointed out that the Wall Street credit rating agencies, plus both the International Monetary Fund (IMF) and Inter-American Development Bank (IDB), had all emphasised the need for “significant tax reform in the Bahamas”.
“We want our economy to be fiscally sound, by generating enough revenues to service debt and build hospitals road and schools,” the BCCEC chairman added.
“What is important is for us to have a balanced, equitable tax structure that improves government revenues but, at the same time, not slow down the economy or disincentivise entrepreneurs from going into business or staying in business.
“We are also strong advocates for more efficiency and less waste in government so that we can have prudent spending of the revenues that we are now getting.
“There is also a need to stamp out corruption to minimise leakages, and the Government needs to demonstrate that it has the will and the teeth to implement appropriate controls so that we maximise the benefit to the country of the taxes that are now in place and the new taxes that might come.”
Emphasising that he did not believe in ‘Soap Box Advocacy’, Mr Cooper said: “Obviously, when I hear a few members opine that VAT will kill their business, I become concerned.
“Likewise any suggestion that VAT will slow down the economy, cause businesses to put investment on hold is a cause of concern for me a chairman of the BCCEC.”
And he told Tribune Business: “By and large, the public does not understand what is being proposed, and large elements of the business community have not zeroed in on VAT and its impact.
“We’re calling on the private sector to be more informed and engaged, and will do our part to make that happen.”
September 30, 2013