By KHRISNA VIRGIL
Tribune Staff Reporter
kvirgil@tribunemedia.net
THE Christie administration met at Cabinet yesterday to work out the details of customs duty rate changes that are to come on stream in the lead up to Value Added Tax implementation, The Tribune understands.
According to sources heavily involved with the government’s tax regime, Cabinet Ministers also agreed that in the coming weeks there is to be a ramping up of a comprehensive public and corporate education campaign with six months until VAT is brought on stream on January 1, 2015.
State Finance Minister Michael Halkitis recently said the VAT Bill would be presented to Parliament by the end of the month.
Since the government announced a reduced VAT introduction rate of 7.5 per cent, half of what was initially planned, it has faced fierce criticism over failing to prepare Bahamians for the new tax system. Originally the government had planned to introduce VAT on July 1.
“The criticisms are unfounded,” an official said, “we listened to public consultation. Both domestic and international advice on how VAT should be implemented and thus you saw us reduce the rate to 7.5 per cent for January 1 implementation. The new rate will apply across the board, excluding a zero rate for exports.
“As part of that, you also heard in the budget communication by both the Prime Minister and the Minister of State for Finance that there will be some reforms to the duty reduction schedule that are in place to help provide the best buoyancy for Bahamian consumers and protecting the revenue needs of the country. That process I can tell you is underway and being finalised with consultation within government ministries.
“Some of the technical work has to be concluded. We have every intention of tabling the VAT legislation and regulations before we break for the summer. So the process is forthcoming and is advancing. Everyone will see a ramping up of the education process momentarily.”
Two weeks ago, local businessman Dionisio D’Aguilar, president of Superwash, predicted that VAT implementation next year would be chaotic because the government had not restarted the consultation/educational push since the Budget debate.
Mr D’Aguilar told Tribune Business that the private sector was anxious to assess the “devil in the detail”.
He said: “Time is ticking. I don’t think they’re going to meet that January 1 deadline. I have no doubt about it. This takes focused, full-time attention to make this work by January 1, and that ain’t happening. They can implement it, but it will be chaos.”
New Zealand VAT experts, who advised the government in April, have said that a strong education programme and clarity about the details of the tax are crucial to its successful implementation.
Comments
Tarzan 10 years, 3 months ago
Please send the New Zealand "experts" back "Down Under". Idiotic advice is not made less idiotic by increasing the number of idiots publishing it.
observer2 10 years, 3 months ago
The Ministry of Finance should be more afraid of the implementation of VAT than the general public.
Nowhere in the Caribbean that VAT has been introduced has it brought down the deficit or reduced economic inequality. It has not worked in Jamaica, Barbados, Trinidad, Antigua, Dominica or St. kitts.
Besides not working anywhere else, the fundamental infrastructural reason VAT will not work is because the Government doesn't know exactly where any asset, bank account or person is located and thus will be unable to locate most businesses or persons to enforce the tax. There are no street numbers on homes/businesses, drivers licenses do not have addresses on them, real property tax records are outdated, a comprehensive database of property vales does not exist and the licensing of vehicles is manually done.
Thus VAT will succumb to the same problems that we have in the collection of business license fees, real property taxes and customs duties. Only VAT collection issues will be much worse as all businesses are turned into 'revenue agents'.
When a business collects VAT it will deposit it in its general operating account and then, about 30 days later those funds will need to be paid to the government. As most businesses operate in overdraft it is questionable if the government taxes will be there in 30 days. There will be a build up of receivables e.g. BEC.
Most developed countries require a separate VAT bank account...imagine 6,000 businesses trying to open VAT bank accounts by January 1!
The Government can say whatever it likes about VAT unfortunately we the people must live with the consequences long after they have retired on their government pensions.
Bunni 10 years, 3 months ago
Question, will wholesalers go down some what since your cutting the duty rate on goods?. Let me answer my own question then ...... NO! We will be paying the same amount on goods plus on top of it we will have to pay the 7.5% on the total. It sure is better in the Bahamas. HA!
B_I_D___ 10 years, 3 months ago
I think that you will find most wholesalers will fluctuate prices up AND DOWN depending on their actual landed cost...now, what the RETAILERS do with the extra savings if there is a price drop at the wholesale end is another matter...many times questions are raised with retailers when a price stays the same on the shelf, when t he wholesale cost to them had dropped significantly.
sheeprunner12 10 years, 3 months ago
Cut out the VAT you fools........................ why are yall trying to destroy this country???????
B_I_D___ 10 years, 3 months ago
There is wording in the legislation to the effect of giving the government control and access to the operating bank account and they automate the deductions out of that account for what they think the proper VAT payables are. Now...how that comes into play when your operating account may be in overdraft, that will be interesting to see...
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