The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “would accept a 5 per cent VAT with no exemptions” and 100 per cent enforcement of all other taxes, Super Value’s owner believes, predicting that the Government will now “relaunch” its preferred reform model.

Rupert Roberts told Tribune Business he wanted “the New Zealand way or no way” when it came to fiscal reform, arguing that the private sector had not objected to VAT as a concept but, instead, the “dirty math” the Government’s initial proposal would have imposed.

Backing the findings from the Tax Coalition’s study, the Super Value president said that in return for the private sector agreeing to tax reform, the Government should sign up to wider fiscal change and the rule of law.

Disclosing that he harboured a “big grievance” over what he perceived as an uneven tax ‘playing field’, Mr Roberts revealed that the real property tax bills for some of his shopping centres and other real estate had “jumped like the Business Licence, in some cases by 200-300 per cent”.

Branding the Government’s initial 15 per cent VAT proposal, and its roll-out, as “a fiasco”, the Super Value chief said the Coalition’s Oxford Economics study had emphasised that ‘zero to minimal” exemptions generated the greatest returns for all parties.

“We don’t agree with minimal exemptions; we agree with no exemptions,” Mr Roberts told Tribune Business.

The New Zealand consultants, on their recent visit to the Bahamas, disclosed that just three sectors, including domestic rent and financial services, were ‘exempt’ from that country’s VAT version.

I personally agree that it’s the New Zealand way or no way,” Mr Roberts added. “If they’re [the Government] going to do it, do it right.

“I don’t think they need a 7 per cent VAT, but instead a 5 per cent VAT, collect it 100 per cent and collect the other taxes.

“I believe the country would accept a 5 per cent VAT with no exemptions to eliminate, or minimise, the workload for the Government and private enterprise.”

As such a prominent businessman, Mr Roberts’s views carry significant weight in the private sector, and especially among the food retail and wholesale industry.

While some may see his comments as a softening of his stance, and a willingness to accept VAT as a reform option, he made it clear it was the details - not the concept - of the Government’s initial plan that sparked private sector opposition.

‘It suggested that a low VAT could bring government the most money and have the least impact,” Mr Roberts said of the Oxford Economics study.

“That, I suspect, is what the Government wanted to hear. It’s probably what they’ll do, and they’ll probably relaunch it.”

Most private sector observers believe that, based on comments by Prime Minister Perry Christie and other indications, the Government will either bring in VAT at a 10 per cent or 7.5 per cent rate. The implementation date, most believe, will be between January 1 and July 1, 2015.

“The first launch was a fiasco, so they’ll probably relaunch it the New Zealand way and, hopefully, they’re smart enough now with the advice they’ve gained to do it right,” Mr Roberts told Tribune Business.

“They got it all wrong and went against the private sector that was going to collect it for them, instead of embracing the private sector for help and co-operation. They got help and co-operation without asking for it, and they rejected it.”

The Government had initially proposed exempting more than 100 goods and services, including so-called ‘breadbasket food items’, from the 15 per cent VAT.

Mr Roberts, though, branded this as “dirty math”, and echoed other private sector criticisms that this would have undermined efforts to minimise tax rates and keep the base as broad as possible.

“We didn’t object to VAT; we objected to the dirty math which would have worked us all to death,” Mr Roberts said.

“Give us a 15 per cent sales tax and you would have had buy-in, but give us this dirty system and we don’t want any part of it. You will get into a Barbados-type nightmare.

“The Oxford study did not come back and say, yes, a payroll tax is better than the others. It came back with what everyone knew: That a low-rate VAT would have the least impact.”

The Super Value chief added that the numerous food-related VAT exemptions would have amounted to a ‘tax break’ for “billionaires, millionaires and the middle class”.

And he called on the Government to work with the private sector on revising its tax reform proposals, as they would inevitably have to be “tweaked” to make them work.

“If we’re going to agree to tax reform, they should agree to fiscal reform and the rule of law,” Mr Roberts told Tribune Business,” all things being equal on tax, and they’re not.

“I have a big grievance with them billing me more than other food stores. We pay right off the chart. There are some things wrong with the Business Licence.

“Our inner-city stores that are a certain size pay $300,000, while a comparable size store of a competitor only pays $30,000. How do they expect me to compete when giving me the same price control?”

Super Value’s total Business Licence fee now stands at $3.1 million following the 2013-2014 Budget increases, and Mr Roberts previously revealed that the original VAT plan would have cost the supermarket chain an extra $5-$6 million annually.

Then there is the real property tax bill. “Super Value is a real estate company. With our warehouse and our shopping centres and so on, we have about 15 premises,” Mr Roberts told Tribune Business, “:and some of them are worth millions of dollars.

“Real property tax is enormous. All I know is that our payments jumped like the Business Licence jumped. In some cases, the Business Licence jumped 200-300 per cent.”

Mr Roberts also warned that fiscal reform “won’t fly” unless the Government got a grip on its spending, adding: “The way they’re spending, they can spend the taxes faster than they can tax you.

“They can tax you out of existence unless they slow down spending.”

Some observers are expecting the Prime Minister to set out his new fiscal reform proposal and timetable during Wednesday’s Budget, and Mr Roberts agreed it was time to settle these and tackle the Bahamas’ twin deficit and national debt problems.

“It’s time to move, but I think they should bring out a proposal now and say when they’re going to do it, and not set unrealistic dates and keep postponing,” he told Tribune Business.

‘In the meantime the national debt is building, the interest is building and we’re not paying it down.”