The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s co-chair yesterday blasted as “absolutely ridiculous” the three-four week timeframe it has been given to analyse the Government’s own Value-Added Tax (VAT) modelling, suggesting this showed it was not serious about consulting the private sector on tax reform.

Robert Myers described as “disturbing” the approach taken by Ministry of Finance officials, with whom the Coalition has met twice, after they indicated the July 1, 2014, deadline for VAT’s implementation was ‘set in stone’ and immovable.

Pointing out that the Ministry was asking the Coalition to do in three-four weeks what it had taken 10 years to accomplish itself, namely develop models showing VAT’s likely social and economic impacts, and run its own figures, Mr Myers said the organisation had written again to Prime Minister Perry Christie asking for a face-to-face meeting with him.

While stopping short of saying there had been a complete breakdown in relations between the Ministry of Finance and Coalition, just weeks into their consultation efforts, Mr Myers yesterday conceded they had “definitely hit some speed bumps”.

He also reiterated that the Government continued to “leave big money” on the table annually, estimating that some $500 million went uncollected under the current tax system.

Mr Myers suggested that collecting this, coupled with reforms such as a payroll tax and legalising/taxing the webshop gaming industry, offered a viable alternative to VAT and could provide the Government with all the revenue it needed.

The Coalition yesterday issued a statement saying it “cannot give meaningful answers” on VAT, due to the continued lack of information made available by the Government.

Despite two meetings with the Ministry of Finance to-date, it said the Government had yet to provide it with half the key elements necessary to analyse VAT, the missing ones being the revised Tariff Schedule and Dynamic Economic Modelling.

Without these, the Coalition said it was impossible to analyse VAT’s likely economic and social impact on consumers and businesses, and how economic growth will be affected.

An economic/social economic impact study on VAT is currently being conducted for the Government by the Inter-American Development Bank (IDB), but it is still uncompleted.

Mr Myers yesterday told Tribune Business that the Ministry of Finance continued to be vague about when this will be released, but said it had promised to “share it with us, hopefully some time soon, and then we can kind of get busy”.

Yet the Coalition co-chair said the “bigger issue” was the Ministry’s seemingly-intransigent position that the July 1, 2014, implementation date for VAT is fixed and cannot be moved.

“They’re not moving the timeline, and are not giving us sufficient time to do a proper analysis,” Mr Myers complained.

“That’s what the technocrats said, which is disturbing to us, and indicates they’re not really serious about consultation and dialogue. We’ve now asked for a meeting with the Prime Minister, because they’re [the Ministry of Finance] saying it’s not in their hands.”

And Mr Myers further told Tribune Business: “They [the Ministry] basically told us we’ll have three weeks once we get the modelling.

“We’ve got three-four weeks to do the analysis before they’re going to act. We’ve got three to four weeks to analyse what they’ve given us, hire our own economic consultant, understand the model and then run some numbers of our own, which is absolutely ridiculous.

“If three-four weeks is all you’re going to give us, you might as well shut the door. We can’t hire an economist and get them here in that time.”

Based on past pronouncements indicating the Government has seen VAT as its tax ‘solution’ for at least a decade, Mr Myers added: “It’s taken 10 years to get to the IDB model. It’s taken 10 years to get the modelling, and you want us to do ours in three-four weeks? It’s absurd.”

The Coalition co-chair said the organisation had written to the Prime Minister “expressing our disappointment” with this position and the “unrealistic pressure” it was putting on the private sector.

He added: “We’re hoping to stay very much engaged with the Ministry of Finance once the modelling is released and the Tariff Schedule is known. There’s not a breakdown in the consultation, but there’s definitely some speed bumps.”

Mr Myers said the Prime Minister and other policymakers now needed to make the Government’s position clear, stating: “Leadership has to start to step up to the plate, and either say: ‘No, we’re not going to give you more time, you’re stuck with it, take it or leave it’, or ‘We appreciate your involvement and are going to co-operate’.

“I can tell you that I’m not going to be doing analysis over Christmas, I can assure you of that. It’s got to be pushed back four to five months to do it properly.

“We have to have the time to analyse this stuff. We have to all agree it’s worth it. Everybody is going to benefit if we get it [fiscal reform] right, and we’re all going to fail if we get it wrong,” the Coalition co-chair said.

“Let’s stop kidding ourselves, slow the process down and make sure we put our heads down. We’re going to have to pay more, and the Government is going to have to cut. It’s going to be tough, we’re all going to have to hurt a little, and everybody has got to chip in.”

Mr Myers said “big issues, really fundamental issues” were at stake for the Bahamas, and he expressed concern that VAT would end up merely delaying necessary reform, as extra revenues would be squandered through increased spending.

“If the intent is to fix it and not kick the can down the road, let’s fix it,” he told Tribune Business. “If we slam VAT in, and think everything’s hunky dory, we’re just kicking the can down the road. In three years we may have an even bigger problem, when the money runs out.

“Let’s hope this [consultation] is not a dead end. We’ve got to keep positive, keep it collaborative. We’ve got to make it happen; it’s our best chance of success.”