'We Don't Want V.A.T., Even At 1/100 Of 1%'
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Super Value’s owner yesterday said Bahamians “don’t want VAT under any circumstances, even at 1/100th of 1 per cent”, and called for the Government to instead implement a wide-ranging fiscal reform package that included a sales tax.
Rupert
Roberts told Tribune Business that the private sector and consumer’s
main complaint was not the level of taxation, but the “complex and evil
system” that VAT will introduce should it be implemented in the Bahamas.
His
comments indicate that Prime Minister Perry Christie’s conciliatory
Mid-Year Budget address, in which he pledged that VAT would be
implemented at a lower rate than the initially proposed 15 per cent, has
failed to win over the tax’s greatest opponents.
It
also contradicts Ryan Pinder, minister of financial services, who in
his MId-Year Budget contribution suggested that a 10 per cent VAT, which
was introduced on New Year’s Day 2015, would be acceptable to many in
the business community based on the feedback he has received.
Mr
Roberts’s comments suggest, though, that the Government is unlikely to
win over many in the business conmmunity and wider Bahamian public who
seem opposed to VAT in any form.
Responding
to the Prime Minister’s address last week, in which he indicated that
the Government would also likely push back VAT’s planned July 1
implementation date, Mr Roberts said such a move was inevitable.
“The poor merchant doesn’t know how it works, so it has to be pushed back,” the Super Value president told Tribune Business.
Then,
suggesting the Government had misread why many Bahamians were so
opposed to VAT, he added: “The merchants and public are not complaining
about the rate; they’re complaining about the complx and evil system of
VAT.
“If
VAT was 1/10th of 1 per cent, they don’t want it. We don’t want VAT
under any circumstances, even at 1/100th of 1 per cent. VAT is a system
that nobody in the Bahamas wants execpt the politicians.”
This
assertion says Bahamians, both private sector and consumer, are opposed
to the VAT concept, rather than the substance or details. Yet VAT,
which taxes the value added at each stage of the production chain, or
some form of general consumption tax has been implemented in more than
140 countries.
But
one senior banking industry source, speaking on condition of anonymity,
told Tribune Business that the pledged lower VAT rate was merely a
tactic to “get the camel’s nose under the tent”.
They
suggested the cut to the proposed 15 per cent rate was a shrewd
negotiating tactic by the Government that was designed to pacify the VAT
opposition.
Once
VAT was implemented at a lower rate, the banker suggested it was only a
matter of time - possibly just a few years - before the Government
sought to raise it, as has happened in many other countries. They also
predicted that the Bahamas would likely follow Barbados in introducing
some form of income tax, too.
While
welcoming the Government’s decision to lower the 15 per cent rate, Mr
Roberts argued: “The country doesn’t want VAT, and the country doesn’t
realise that VAT allows the Government millions and millions of dollars
up front.
“We
have no VAT now, and the minute we have it, merchants will pay it when
we import products. It may be six months before we sell that
merchandise, but the Government collects its money right away. They have
millions and millions of cash flow, and I might not even sell it after
six months if it becomes spoiled or someone steals it.”
Philip
Beneby, president of the Retail Grocers Association, yesterday told
Tribune Business that the food retail/wholesale sector was still unsure
whether VAT was “the right fit” for it and the Bahamas.
He
argued that it was “not as fair to the grocery trade as it is to other
industries because we cannot reclaim 100 per cent of our inputs”.
Breadbasket
items, which typically are price controlled and account for 75-80 per
cent of food store inventories, will be treated as ‘exempt’ under the
proposed VAT legislation. Vendors of ‘exempt’ items cannot claim back
the VAT they pay on these products’ inputs, meaning supermarket
operators will only be able to recover 20-25 per cent of their tax
payments.
As
previously reported in Tribune Business, food store operators fear this
will result in reduced profit margins and increased costs, resulting in
job losses and outlet closures.
Mr
Beneby said the Government had shown no sign to-date of moving from
this position, adding: “It’s not fair to us in its present form. I don’t
think our industry is treated in that fashion anywhere else. The
grocery trade and retailers are carrying some of the burden for
Government and it’s not fair to us.”
Mr
Roberts reiterated: ‘We just don’t want the system of VAT. It’s not the
concept of taxation; we’re willing and able to pay the taxes for them
in a system we like.
“If
the Government came to the business community and said look, we have a
deficit, we’re cutting our expenditure, and we want you to help us
collect the money.......... if they were to package it, we’d have been
collecting a sales tax for them, at 15 per cent.
“We
don’t like VAT. I hope the Government realises that’s the problem. We
like the Government; we don’t like the system. It doesn’t work well
elsewhere, so why should it work here?”
March 20, 2014
