The Tribune

The Government is confident that adopting Value-Added Tax (VAT) will lead to a significant reduction in cases of tax fraud, a legal expert in the Ministry of Finance affirmed.

“VAT will reduce fraud because it creates more transparency at every stage from production, to importation, to point of sale,” attorney Renee Fisher said. “Business will be split into various sectors, and each will be given a single TIN (tax identification number), so fraud will be easier to spot.”

In countries where VAT is the accepted form of taxation, it has served as a catalyst for the improvement and modernisation of fiscal regimes because it forces the standardisation and computerisation of collection and oversight systems.

Among the many benefits of this, Ms Fisher told public servants at the Department of Housing, will be a reduction in the fraud that undermines revenue collection.

“In the end, it will be better for the consumer, as it will lead to increased accountability,” she said.

On getting businesses ready, Ms Fisher said “most systems already have a tax option embedded that can be reconfigured to show the VAT automatically. Businesses already submit Customs forms; that will have to be modified to show the VAT percentage”.

The attorney told public servants that the revenue improvements now sought became necessary after successive Bahamian governments operated with fiscal deficits for years. Action must now be taken, she added, before the Bahamas “goes off the cliff” of currency devaluation.

A devalued Bahamian dollar, Ms Fisher said, would lead to a significant and rapid rise in government debt, less capacity for the Bahamas to borrow money in an emergency, a credit downgrade and the eventual loss of access to credit markets.

For the average Bahamian, this would translate into more new and higher taxes, large reductions in public spending that curtails curtail public services, and large job cuts in the public service. And a devalued dollar will translate into higher prices for consumers.

The seminar was the latest in an ongoing series of public education presentations hosted by the Government as it continues to prepare for VAT implementation.