By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
A 5 per cent payroll tax administrated via the National Insurance Board (NIB) could generate $190 million in annual revenues and enjoy a more “seamless implementation” compared to Value-Added Tax (VAT), a Tax Coalition co-chair argued yesterday.
Gowon Bowe, speaking at a Bahamas Society of Engineers (BSE) luncheon yesterday, said such a tax administered through NIB’s existing infrastructure would be less costly and simpler to collect.
“There has been great support from the business community to take on this cost when comparing the cost of implementing VAT systems and administration,” said Mr Bowe.
The Government is expecting to raise an extra $200 million in annual revenues from its proposed Value-Added Tax (VAT), and $500 million gross, with the $300 million difference replacing foregone Customs duties.
Noting that a sales tax had not been dismissed entirely as a reasonable alternative, Mr Bowe said: “If you are going to have a consumption-based tax, VAT is going to be superior to a sales tax, the reason being that there is a self-regulating element of VAT.
“Sales tax does not capture services; it only captures good. If we are by and large a services economy, and your concern is that services have largely gone untaxed, at this point in time we need an initiative that is going to bring the service economy into the taxable realm.”
Mr Bowe added that some of the other revenue-raising initiatives suggested by the Coalition included taking back the country’s airspace, introducing a shipping lane tax and regulating and taxing web shops.
“Some of the things we are looking at as alternatives are what can be an immediate increase in taxation to enable the Government to cut into the deficit they are currently running on an annual basis,” said Mr Bowe.
“We are looking at what can be immediate to help towards the initiative, so that any delay with a wider fiscal and tax reform does not allow us slip further into havoc while we are trying to figure it out. It’s not delay for the the sake of delaying; it’s delaying to ensure that we get it right.”
Mr Bowe said he did not believe VAT would ultimately generate more business for accountants. He explained: “Those who can afford it should have the individuals capable of doing it.
“Those who can’t are not going to miraculously be able to afford it just because it’s being implemented. That has been the myth: that the accountants love this.
“For me, other than the initial up front advice that larger businesses would look for in terms of structure so they can minimise their tax burden, that will be a short lived consultancy period and, after that, it will be the people who work within the organisation that is going to do it.”
Comments
jlcandu 10 years, 9 months ago
Please note that the HST (formerly the GST) in Canada is a goods & services tax. There is no reason why a sales tax has to be levied only on goods. Sales tax is used the world over as a consumption tax (U.S., Canada, Europe).
This argument of VAT being self-regulated is a bunch of crap. It is only going to regulated to the extent that the government of the day has a proper compliance unit that actually does it job and enforces ALL taxpayers to pay their fair share.
Sales tax is easy to implement, easy to understand, and easy to comply with. VAT is not.
Cornel 10 years, 9 months ago
I do not understand "Sales tax does not capture services; it only captures good. If we are by and large a services economy, and your concern is that services have largely gone untaxed . . " I would think that you could make a law to add sales tax to anything that you want. This seems to be an inaccurate comment.
As far as VAT being self regulated, the reason is that a company pays VAT on purchases and Collects on sales. So if they want to get back what they paid in VAT they need to report what they collect. With sales tax everyone will simply sell things off the books and no taxes will be collected.
ohdrap4 10 years, 9 months ago
I would rather VAT than a payroll tax.
A payroll tax is not going to capture services, and only the schlemiel on payroll like me are going to pay it. My former bosses were not on payroll, and used to say they did not pay themselves salaries so they could pay ours. But, they used company credit cards and checks at food stores, bought 'company cars' that they drove around, i.e. they were very well compensated.
So lawyers, doctors,, shop owners, etc.. get to live tax free.
From a Math stand point, as stated on the white paper, both a payroll tax and income tax will not collect from too large a sector of the population.
In that sense, VAT IS FAIRER than payroll tax.
sheeprunner12 10 years, 9 months ago
I agree with the above perspective
It seems that we cannot close the tax loopholes and cut down on corruption in the MOF and other government departments.
It appears that in The Bahamas, the wealthy and well connected always seem to be able to "duck" paying taxes. The poor and the unconnected carry the burden.
Its a real head scratcher!!!!!!!!!!!
We betta wakeup and get off the gravy train before it wrecks.
Sign in to comment
OpenID