The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian domestic aviation industry yesterday said it was seeking ‘equal treatment’ with other transportation sectors over Value-Added Tax (VAT), a senior figure fearing it would suffer “devastating” consequences if not ‘exempt’.

Anthony K. Hamilton, president of the Bahamas Association of Air Transport Operators, told Tribune Business there was still “conflicting information” over how the domestic aviation industry will be treated under VAT.

Implying that this was causing confusion and uncertainty in the industry, Mr Hamilton said the Association and others were pushing John Rolle, the Ministry of Finance’s financial secretary, for clarification of its tax treatment.

He disclosed to this newspaper that the Association, and wider industry, were developing a VAT position paper to present to the Government, along with tax reform alternatives.

Mr Hamilton said the uncertainty had arisen because Ishmael Lightbourne, the Ministry of Finance consultant, had told the domestic aviation sector - largely populated by Bahamian-owned airlines - that they would be treated a specific way under VAT.

This is understood to be that the sector would be VAT ‘exempt’, meaning it would not have to levy 15 per cent on the services it provides to customers, although it would be unable to recover the tax paid on its inputs.

However, Mr Lightbourne’s presentation came before the November 2013 release of the draft VAT legislation and regulations, which changed the proposed treatment of the aviation sector from previous versions.

While domestic aviation was initially to be treated as VAT ‘exempt’, like the domestic land and water transportation sectors, the final version treated it - and it alone - as taxable, meaning it will have to levy 15 per cent on consumers.

Another January 20 presentation by Mr Lightbourne failed to shed further light on the issue, and Mr Hamilton said: “I’m not convinced the legislation is fine tuned.

“There’s still a lot ignorance, and there needs to be further consultation with the aviation industry so there’s proper understanding. Without that, a lot of errors could be made to the detriment of the industry.”

Emphasising that tax reform should not inhibit the aviation industry’s ability to contribute to the Bahamian economy, the Air Transport Operators chief said the sector was working on a position paper that would include “better alternative approaches to tax reform”.

Calling for the domestic aviation sector to enjoy the same tax treatment as its land and seaborne counterparts, Mr Hamilton told Tribune Business: “If you’re going to pit one against the other, disadvantage one against the other, it does not make for a good economic result.

“We need to sit down and talk about it, so the end result is something all of us can live with.”