The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s co-chairs yesterday conceded it will be “a long shot” to implement Value-Added Tax (VAT) by the January 1 target date, with the International Monetary Fund (IMF) disappointed the Bahamas did not meet the original deadline.

Gowon Bowe told Tribune Business, though, that the Fund, whose team is in Nassau this week for meetings with the Government and private sector, felt the delay was a “minor price” to pay for achieving greater VAT buy-in by businesses and consumers.

He acknowledged, though, that hitting the Government’s VAT implementation target date was becoming “less likely” with each passing day.

Almost two months has elapsed since Prime Minister Perry Christie unveiled the revised 7.5 per cent VAT plan in the late-May Budget statement, and no further progress has been made.

With Michael Halkitis, minister of state for finance, announcing that the draft VAT Bill and accompanying regulations will be released some time before end-July, Mr Bowe said he had spoken to several ministers about “plotting out a project management schedule” towards the new tax’s implementation.

He told Tribune Business that hitting the January 1 deadline would depend on the attention and resources the Government devoted to VAT education/legislation, plus whether the draft Bill and regulations contained most of the recommendations urged by the private sector and New Zealand consultants.

Mr Bowe and his fellow co-chair, Robert Myers, both told Tribune Business that “the ball is in the Government’s court” when it came to hitting the VAT implementation deadline.

“For me, it’s a long shot,” Mr Bowe told this newspaper of January 1, 2015. “I wouldn’t say it’s impossible yet, but each passing week makes it less likely.

“If they [the Government] have a proper project management team that can work very closely with the private sector in the coming weeks, and work through things methodically in an efficient manner, we have a chance of meeting that.”

Mr Myers echoed similar sentiments, telling Tribune Business: “When they first announced the date, I had no issue with it.

“Tow months later, I have an issue with the date when they have not had the first conversation with us.”

Mr Myers, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said of the Government: “They hold the key to the schedule.”

He added that it was “not for lack of trying” on the Coalition for Responsible Taxation’s part that no talks had been held with the Government until informal contacts with Mr Bowe earlier this week.

Pointing out that the three-person VAT Task Force announced by the Prime Minister in the Budget had yet to be appointed, Mr Myers said: “We’ve got a lot of work to do.

“We don’t hold the key to the schedule; they do. If they delay for two months, you push it back two months. It’s like construction or any other sector; you identify the problem and push the date back, or dedicate the resources to it.

“You can’t tell the guy painting the house that everyone else took six months, so he has to finish in a day. We have to be realistic. The private sector only has so much resources.”

Mr Bowe, meanwhile, said he had tried to arrange a meeting between the Coalition and Mr Halkitis; Khaalis Rolle, minister of state for investments; and John Rolle, the Ministry of Finance’s financial secretary, for Monday this week.

This, though, had to be delayed as a result of the IMF team’s presence in the Bahamas, with Mr Bowe himself among private sector delegates that met the Fund yesterday at the BCCEC offices.

“It was a positive meeting,” Mr Bowe said of the IMF talks. “They are obviously seeing positive signs in terms of what the Government and Coalition did.

“While they were a bit disappointed that the [VAT] timing was not what they had expected, they are pleased with the public discourse and consensus building exercise that took place.”

Emphasising that it was vital for the Bahamas to maintain its ‘investment grade’ sovereign credit rating, and improve the ‘outlook’ on it over time, Mr Bowe said the IMF indicated the Bahamas was “moving in the right direction”.

“They were a bit concerned over the [VAT] timing, but feel that is a minimal price to pay for having greater consensus and buy-in.”

Mr Bowe, a PricewaterhouseCoopers (PwC) accountant and partner in his ‘day job’, said he was aiming to re-arrange a meeting with the Cabinet ministers and Mr Rolle before week’s end.

“We’re trying to at least plot out a project management schedule going forward to get the whole initiative moving, so we don’t lose momentum,” he told Tribune Business.

This, Mr Bowe added, would focus on specific areas and set out what both sides wanted to achieve. It will detail specific timelines for when the VAT legislation/regulations will be released, and when the private sector must submit its feedback and recommendations to government by.

The Tax Coalition co-chair said the Government was hoping that the so-called ‘guidance notes’, set to accompany the VAT Bill and regulations, would address the private sector’s implementation concerns.

Yet he warned that progress towards January 1 would depend heavily on “the details” in those documents, and whether they met the private sector’s expectations to allow “for smooth implementation”.

“If they’ve taken on the recommendations from us and the New Zealand team, it shouldn’t be a problem, but we can’t make that determination until we see it,” Mr Bowe told Tribune Business.

He warned that if there were “fundamental differences” between the Government and private sector over the revised Bill and regulations, or “significant and serious concerns”, it would delay the process.

Mr Bowe said it was vital that there was “give and take” on both sides to ensure “a happy medium” was reached, so government and private sector could focus solely on implementation issues as opposed to the legislation.