The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government was yesterday urged to present a clear plan for what it intends to do with the $500 million revenue ‘windfall’ generated by Value-Added Tax (VAT) and other reforms, a leading accountant warning of “concern and disbelief” that this would ignite a spending spree.

Speaking at a Bahamas Institute of Chartered Accountants (BICA) seminar as part of the Bahamas Chamber of Commerce and Employer’s Confederation’s (BCCEC) Tax Coalition, Gowon Bowe, a partner at PriceWaterhouseCoopers (PwC) Bahamas, said: “There isn’t any government in the world that has gotten more money that has not spent it.”

Rather than use the extra revenues to close the fiscal deficit and pay down the national debt, he said there was concern among many Bahamians that the Christie administration would use them to fuel excessive public expenditure.

“There is a level of concern or disbelief that the funds, or additional funds, generated from VAT will in fact be deployed to reducing our deficit and bringing down our debt levels,” Mr Bowe said.

“There have been conflicting views in terms of some of that being used for social initiatives, etc. We cannot simply look at the revenue side in terms of correcting our fiscal course, but we have to be looking at the expenditure side. It is important that we have a clear understanding of what the Government’s overall fiscal plan is going to be and how revenue fits into it.”

Outlining some of the other concerns the Coalition has directed to government, most of which have been highlighted in Tribune Business in recent weeks, Mr Bowe also questioned the practicality of the proposed bonded warehouses.

Tribune Business understands that the Government, in an effort to soften the impact of VAT’s introduction, particularly for large wholesalers, is proposing to operate transitional bonded warehouses where they will be able to import their goods into the country two months prior to VAT without having to pay the higher rate of Customs duty.

“Who is going to pay to have Customs come out on a weekly basis if I have a bonded area in my warehouse because, under the dual lock system, they have to be there and I have to be there?” Mr Bowe asked.

“How much is it going to cost for them coming in each Friday or each Saturday? Is it practical for me to be taking inventory in and out?

“It’s not as simple as it may sound. There are a number of transitional issues, and that will only be resolved once we have the legislation and regulations.”