The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Prime Minister Perry Christie yesterday said import duty-related revenue had declined due to new tax treatments designed to accommodate Value-Added Tax (VAT), not “under-performance”.

Addressing the House of Assembly, Mr Christie said Customs Duties had dropped as a natural consequence of reducing/eliminating numerous import tariff rates to minimise VAT’s impact on certain segments of Bahamian society.

And, to lessen the new tax’s impact on the private sector, the Government had changed the basis for calculating import duties away from the Cost, Insurance Freight (CIF) method to the less expensive Freight on Board (FoB).

Responding to Opposition taunts that Customs duty revenues are off-target, Mr Christie told the House of Assembly: “Last January, with the introduction of VAT, the Government made a conscious decision to reduce or eliminate import and Excise duties on a wide variety of goods.

“The Government also made the decision to change the basis of Customs Duty calculation from cost insurance and freight (CIF) to freight on board (FOB). These two changes have resulted in a predictable and planned reduction in revenue from Customs duty, not under-performance as some would suggest.”

Tackling claims that VAT imposed at the border amounts to ‘double taxation’, Mr Christie said: “The VAT is calculated on the landed cost of the good.

“So VAT is applied on the FOB cost, which includes data plus the shipping cost plus VAT. To do it otherwise would amount to treating imported goods more favourably than domestically produced goods, as the VAT is calculated on the full cost plus margin of the domestically-produced good.”

The Prime Minister also refuted suggestions that VAT on condominium fees amounted to a ‘double charge’, describing this as “without basis”.

“Any fees paid for mortgage or rental of a condominium is VAT exempt. Fees paid to a condo association or homeowners association are VAT-able,” he added.

“The VAT liability associated with these fees are calculated on a cash basis. This outcome is as a result of industry consultation. In fact, any other treatment would have resulted in these entities being charged VAT for services without any mechanism to recover the VAT.”

Speaking ahead of the Government’s mid-year Budget statement, Mr Christie asserted: “The Government is well-positioned to achieve its fiscal targets.

“This has been driven in a large part by the continued strong performance of the tourism industry, led by Grand Bahama and Bimini, and continued strong flows of foreign direct investment.”