The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s chairman yesterday said he took government pledges to review Business Licence fees during the 2015-2016 Budget preparations “with a grain of salt”, suggesting any changes were at least another year away.

Gowon Bowe told Tribune Business that any reduction, or elimination, of Business Licence fees would not occur until the Government knew how successful Value-Added Tax (VAT) was as a revenue-raising measure.

“That’s one they said they would review but, reading between the tea leaves, I take that with a grain of salt,” Mr Bowe said of any government review of Business Licence fees.

He added that Ministry of Finance officials, during their Friday meeting with the Bahamas Motor Dealers Association (BMDA), indicated there would be “a consideration” of Business Licence fees amid preparations for the 2015-2016 Budget.

The Government’s initial Tax Reform ‘White Paper’, published in February 2013, pledged to phase-out the existing Business Licence regime post-VAT implementation, replacing it with a flat $100 fee charged to all businesses.

However, the Christie administration quickly backtracked on the issue, saying it would only re-assess Business Licence fees once it knew whether VAT was hitting the necessary revenue targets.

The Coalition for Responsible Taxation, in its list of unresolved VAT issues, which has been seen by Tribune Business, raised concerns over whether the Government intended to follow through on its Business Licence promises.

“Business License fees remain the same with introduction of VAT,” the Coalition noted.

“The Government indicates the need to maintain fees at least through the first year of transition to VAT. It commits to review fees as part of the 2015-16 Budget process. Businesses would like some assurance that this is still subject to consideration.”

The Coalition list said Business Licence fees had “increased significantly” in 2013. And, recalling the White Paper’s promises, its members “appeal to government to eliminate or reduce the impact” of these fees.

Mr Bowe, meanwhile, confirmed that the Government had indicated there would be “no initial change [to Business Licence fees] until they understand how VAT is working, and how successful it is”.

“My judgment on this is that there will be no change to Business Licence fees until the next Budget cycle,” Mr Bowe told Tribune Business.

“I don’t think it will be 2015-2016; I think it will be 2016-2017 at the earliest.”

BMDA members, in their submissions to the Coalition’s list, said the Business Licence fee, which is calculated at 1.25 per cent of an auto dealer’s turnover, often resulted in them paying more in taxes than they made in annual profits.

“In many instances, the Business License tax, based on 1.25 per cent of turnover, places member firms with a financial loss, having to pay the Government more in taxes than we earn in net profit,” the BMDA said.

High electricity costs were also cited by the private sector as a major impediment to business expansion, profits and job creation.

“Two thirds (67 per cent) of our electricity bills go toward paying the fuel bill (fuel surcharge). This is ridiculously excessive and needs to be reduced,” the Coalition list said.

“This is having a very negative impact on our bottom line and is causing great distress. Net metering is the way to go as in other progressive societies, and will encourage businesses that can afford to do so to move ahead to alternative energy sources with the view of reducing operating costs.”