The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE implementation of any new tax system “has to take account” of the legal and economic privileges Freeport enjoys under the Hawksbill Creek Agreement, a former Cabinet minister has warned.

Speaking at a recent meeting of the Rotary Club of Freeport Mr Laing, the former minister of State for Finance said: “Any consideration of new tax implementation in The Bahamas has to take account to legal and economic privileges enjoyed by Freeport through the Hawksbill Creek Agreement,” said Mr Laing. He added: “Just as it ought to be the case with all taxes imposed by the Government, the imposition of a VAT must not proceed without definitively considering its legality and appropriateness for Freeport in light of The Hawksbill Creek Agreement. No one, least of all the economically hard-pressed businesses and people of Freeport and Grand Bahama need a legal battle or economic issue that pushes their misfortunes further.”

The proposed introduction of a VAT, as well as the implementation of new and increased taxes in the 2013/2014 Budget, have caused considerable consternation in the Freeport business community. While acknowledging that this nation’s taxation system needs to be reformed, Mr Laing charged that the Government should “rethink” its plan to introduce a 15 per cent Value Added Tax in 2014. Mr Laing charged that the Government’s plan to implement a VAT on July 1, 2014, was firstly “not doable”.

The Government is proposing to implement a Value Added Tax (VAT) on July 1, 2014, at a rate of 15 per cent, with the hotel industry to be subject to a lower 10 per cent rate. The Government plans to eliminate the 10 per cent hotel occupancy tax rate, replacing it with VAT at the same rate. A 10 per cent VAT rate will also be applied to all hotel food and beverage sales. Companies with an annual turnover of $50,000 or less will be exempt from having to pay VAT.