Monday, November 11, 2013

The Tax Coalition in The Bahamas praises the Bahamian Prime Minister for being open to pushing back Value-Added Tax’s (VAT) implementation day in The Islands

Tax Coalition Chiefs Praise Pm’S ‘Fantastic’ Vat Remarks

Tribune Business Editor
Nassau, The Bahamas

Co-chairs for the private sector’s Tax Coalition yesterday praised indications that the Prime Minister was open to pushing back Value-Added Tax’s (VAT) implementation day as “fantastic”, warning it was “paramount” that the economy be protected.

Pointing out that the Government would not achieve its revenue-raising objectives if the economy “went to hell in a hand basket”, Robert Myers said he was interpreting Mr Christie’s comments positively, and as a sign that the Government was listening to the private sector’s concerns.

And, picking up on another aspect of the Prime Minister’s remarks, Mr Myers said it was “ludicrous” that a wealthy, ‘informal’ sector in the shape of web shop gaming remained untaxed as the Government moved to increase the burden on legitimate businesses and Bahamian citizens.

Suggesting that the Government could earn as much as $100 million per annum from taxing web shop gaming, Mr Myers added that the Treasury would likely earn another $50 million just by tightening up on the collection of existing taxes.

He especially called on the Government’s new Central Revenue Agency (CRA) to compare bank wire transfers and drafts obtained by companies to finance import purchases with subsequent Customs declarations, to ensure they were not evading due revenue payments. And Business Licence renewals also needed to be better linked with being current on tax payments

With these various initiatives potentially generating another $150 million per annum for the Government, Mr Myers said successful execution would enable it to either lower the VAT rate of possibly avoid introducing the new tax altogether.

The businessman told Tribune Business that the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) Coalition for Responsible Taxation was attempting to “drive one objective; that the economy is protected”.

“No matter what we do with [government] revenue, the primary issue is we protect the economy,” Mr Myers emphasised.

“We understand the need for government revenue, we support the need for something to be done. The question is: What are we going to do, and how, and that we protect and unequivocally ensure the economy is not going to take a hit?

“That’s paramount here. No one wins if the economy goes to hell in a hand basket. That has always been our position.”

Mr Christie’s comments on Wednesday outside the House of Assembly indicate he is prepared to push the July 1, 2014, target deadline back if he feels the Government and private sector are not ready for it.

This is line with the Coalition’s calls for the Government to postpone VAT implementation to a date at least 12 months from the release of the accompanying legislation, regulations, Tariff Schedules and economic models.

The Bahamas is now less than eight months from the July 1 VAT implementation deadline, with none of the above documents having been released.

Still, interpreting the Prime Minister’s comments as a sign the Government was willing to dialogue with the private sector, Mr Myers said of his remarks: “That’s great, that’s fantastic.

“We’re very happy with his comments, and that’s the responsible thing to do. He’s suggesting in that statement that he’s listening to the business community.”

He was backed by fellow Coalition co-chair, Gowon Bowe, he said the Prime Minister’s comments indicated he wanted discussions with both it and the wider business community.

The PricewaterhouseCoopers (PwC) accountant and partner added that while the Government knew it was necessary to change the Bahamas’ fiscal course, it was “equally appreciative that if they get it wrong, it will be catastrophic”.

Pointing out that VAT was one component of fiscal reform, Mr Bowe said all elements had to be bound together in one “complete and comprehensive approach”.

“We have to look at spending, how we manage the debt, our foreign currency reserves and how we manage the reserves at the Central Bank,” Mr Bowe told Tribune Business.

“So it’s a multi-pronged approach. We need to make sure we have it correct.”

Mr Bowe added that he felt Mr Christie would not have made the comments he did without senior officials telling him there were issues that needed to be tackled with respect to VAT.

Mr Christie also suggested that January’s web shop gaming ‘opinion poll’ outcome had deprived the Government of another revenue stream, something Mr Myers agreed with.

“It’s absolutely ludicrous to think we’re going to tax the legal entities of this country, and the citizens of this country, while this sector remains unregulated, open and illegitimate,” he told Tribune Business.

“It’s absurd to think legitimate people pay taxes, and these numbers houses remain unregulated because we’ve not figured out how to regulate them.

“It’s not going anywhere, and we’ve not indicated we have the fortitude to close them down. Let’s stop fooling ourselves. The numbers guys want to be regulated, want to be taxed.”

Mr Myers said Wednesday’s meeting with the Retail Grocers Association, and other Bahamian retailers, went well in terms of introducing them to the Coalition and its objectives and having them elect representatives to it.

Emphasising that the Coalition was not seeking to “override” or take the place of individual industry Associations, Mr Myers said it was intended to act as a “catalyst” and focal point through which they could all air their VAT-related concerns to the Government.

He added that the Coalition was now “imploring” them to submit their industry-specific concerns to it, and provide recommendations on revenues that the Government was “leaving on the table” or were easy to collect.

Suggestions had already come in from the Bahamas Diving Association and Marina Operators, Mr Myers said, adding of the fiscal situation: “We can sit here and cry, but we’re here.

“Now you’re asking for a paramount change in the way we do business, and what’s going to happen in our lives. We made a mistake, and have got one shot to fix this. Let’s fix it. We’ve got to go down fighting.”

November 08, 2013