The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is subtly signalling it will miss its target Value-Added Tax (VAT) implementation deadline and introduce it at a lower rate than the advertised 15 per cent rate, a well-known businessman said yesterday.

Dionisio D’Aguilar, Superwash’s president, told Tribune Business that VAT would “be a failure” if the Christie administration sought to hit its existing timelines, saying there was “no way” it could make July 1.

“I think a number of Cabinet members have indicated there’s no way they intend to meet that July 1 deadline, and it’s probably the third quarter of this year,” he told Tribune Business.

“There’s no way they can implement by then. It will be a failure. That’s just not going to happen. There is evidence it won’t come out by July 1. It’s too late to get all the infrastructure in place and up and running by then.”

Ryan Pinder, minister of financial services, is among those to hint at the VAT-related concerns pervading the Christie Cabinet. In his Mid-Year Budget presentation, he referred to a leading businessman telling him that a 10 per cent VAT and January 1, 2015, implementation deadline would be acceptable.

And Mr Pinder also listed several alternative revenue raising measures, such as ‘web shop’ taxation, increasing work permit and residence fees, and levying a ‘corporate income tax’ on non-resident businesses based in the Bahamas.

Mr D’Aguilar pointed to comments by John Rolle, the Ministry of Finance’s financial secretary, to last week’s Grand Bahama Business Outlook, in which he said a lower rate than 15 per cent VAT would correspond to a smaller reduction in Customs duties, as further indications of modified government thinking.

Prime Minister Perry Christie himself indicated that the Government was open to movement on the VAT rate, noting that the Inter-American Development Bank (IDB) had suggested 10 per cent, while former finance minister, James Smith, had advocated 7.5 per cent.

Mr D’Aguilar told Tribune Business that he anticipated the VAT rate would be lowered to between 7-10 per cent, although it was unlikely the Government will adopt an alternative form of taxation.

“You see it in what John Rolle and others are saying,” he explained. “It’s definitely going to be VAT, but it probably won’t be July 1, and probably will be less than 15 per cent.”

Many in the private sector believe it is now practically impossible to implement VAT by the July 1 target deadline, given that there are less than four months before that date, which coincides with the start of the Government’s 2014-2015 fiscal year.

The VAT legislation and regulations have yet to be finalised and approved by Cabinet, let alone passed by Parliament.

A draft Tariff Schedule also has yet to be released for public consumption, and businesses have yet to be able to get their IT systems and software VAT ready, plus test it and integrate it with the Ministry of Finance.

The Superwash president said that given VAT’s complexity, it was essential for the Government to grant “ample” time for it to be rolled out.

“I think the Government has decided to afford the private sector the ability to go through its motions of dynamic economic modelling,” Mr D’Aguilar added.

“I think they’ve decided to let the process run its course; that’s the bone they’ve thrown to the private sector. It’s in their interests to get the private sector on board. They’re going to give it some time, which is fine. It makes sense for them to wait.

Mr D’Aguilar told Tribune Business that he was also going to push the Chamber of Commerce for “a 10-point plan” that would seek to tie the Government to various fiscal rules, including spending levels and debt ratios that they must not exceed, in a bid to ensure extra VAT-related revenues were not squandered.

And he also suggested he would “not pay any more taxes” until the Government taxed the ‘web shop’ industry, something he described as a “non-starter”.