The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Chamber of Commerce’s tax coalition has urged the Government to postpone Value-Added Tax’s (VAT) implementation to a date “at least 12 months” from when it releases the draft legislation, in order to give the private sector and consumers time to adjust to “seismic change”.

The plea was contained in an October 16 letter sent to Prime Minister Perry Christie by the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) Coalition for Responsible Taxation, which warned that businesses “cannot be practically ready” for VAT’s planned July 1, 2014, implementation.

The letter, signed by the Coalition’s co-chairs, BCCEC vice-chairman, Robert Myers, and PricewaterhouseCoopers (PwC) Bahamas partner, Gowon Bowe, reiterated that it was impossible to determine VAT’s impact on the private sector and wider Bahamian economy until the relevant legislation and regulations had been released for public consumption.

The Coalition’s position was yesterday backed, but in much harsher, raw terms by a well-known attorney, who separately told Tribune Business the Government’s failure to properly prepare the country via a timely release of all VAT-related details “screams of incompetence”.

Carey Leonard, the former Grand Bahama Port Authority (GBPA) in-house counsel, who is now a Callender’s & Co attorney and partner, agreed in a column produced on Page 5B of today’s Tribune Business that the lack of information made public meant July 1, 2014, was “totally impractical” as an implementation date.

He wrote: “Sadly, the drafts of both the law and the regulations have been in the hands of the Government since, at the latest, March 2013, yet they have not been released to enable businesses to prepare.

“This means that the type of computer programs needed cannot be determined, the cost cannot be estimated, and the required training of staff cannot be planned for or implemented. Nothing can be put in a budget because no one knows what to budget for.”

Summing up the consequences, Mr Leonard added: “The Government has taken the last three years or so to prepare, and yet it expects businesses to implement it without any preparation at all.

“Indeed the lack of action by the Government screams of incompetence. The idea of introducing VAT on July 1, 2014, because of this complete lack of action, has become totally impractical.”

Further questions regarding the Government’s VAT implementation timetable are likely to be raised by yesterday’s BCCEC luncheon to discuss planned tax reforms.

Marla Dukaran, Royal Bank of Canada’s (RBC) group economist for the Caribbean region, said the ideal timetable for “successful” VAT implementation, based on regional experiences, was a “minimum” of 18 months and “preferably” 24 months.

The Christie administration’s timetable has been towards the lower end of that range, and many observers are likely to argue that it has not allowed the “minimum” 18 months given the paucity of detail made available to the private sector and Bahamian public.

John Rolle, the Ministry of Finance’s financial secretary, speaking at the same BCCEC luncheon, acknowledged the “growing impatience” over the Government’s failure to-date to release the VAT legislation, regulations and accompanying revised Tariff Schedule.

Asked when he expected these to be released, he responded: “Optimistically, I would expect to see that process concluded in the next two weeks.”

The Financial Secretary previously told Tribune Business that the Ministry of Finance had finished its work on VAT, and the matter was now before Cabinet for a policy-level decision.

The continued delay indicates that the Christie Cabinet is still chewing over various details, particularly which goods/industries should be treated as VAT exempt or zero-rated.

Mr Rolle admitted that the continuing uncertainty, in the absence of specifics on both VAT and revised Customs duties/tariffs, was creating havoc for Bahamian businesses trying to budget and plan for next year.

Similar themes were addressed by Messrs Bowe and Myers in their letter on behalf of the Coalition for Responsible Taxation.

Calling for a meeting with the Prime Minister “at your earliest opportunity”, the duo reiterated Mr Myers’ earlier calls for the Government to release the VAT Bill, regulations, revised Customs Tariff Schedule and all studies/economic modelling “that justifies the financial claims” being made with respect to the new tax.

Pointing out that it was impossible for the Coalition to assess or understand VAT without this, Messrs Bowe and Myers said: “Finally but most importantly, given the seismic change in our system of taxation and the delays in the release of critical information above, we strongly recommend that the Government postpone the intended date of implementation of VAT to a date that is not less than 12 months from the release of all of the aforementioned critical information.

“The consensus of our members is that the private sector cannot practically be ready for the proposed July 1, 2014, implementation date.

“Without having assessed, understood, evaluated and discussed actual legislation, regulations, tariff schedules and modelling with the Government, there can be no meaningful understanding of the implications of the proposed legislation on the consumer, private sector or the economy,” they added.

“We draw your attention to the uneasiness of those parties that will be most impacted both financially and administratively, the private sector and the consumer, primarily due to the lack of information and, at times, conflicting information.

“And as the reform of taxation in the Bahamas is integral to the success of this great nation, it is essential that the greatest understanding and acceptance is received from all parties in order to achieve the intended successes of the reform.”

Emphasising that the Coalition wanted a constructive engagement with the Government, Messrs Bowe and Myers said this was “the most effective way to obtain change, gain progress and achieve success in our country.

“The public and private sector have been divided for fat too many decades, and with the growing challenges our nation faces, we implore you to facilitate the bridging of this gap.”

Mr Myers told Tribune Business last night that the Coalition was awaiting a response from the Prime Minister and his government.