The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Democratic National Alliance’s (DNA) leader yesterday urged the Government to “open the Bahamas for business”, warning it would be unable to “tax its way out of debt”.

Branville McCartney warned that the Christie administration’s “desperation for revenue” was threatening to further burden an already-stretched private sector with more compliance bureaucracy and red tape.

“They are desperate for revenue, and they are taxing the Bahamian people to get out of their debt,” the DNA leader told Tribune Business. “You cannot tax your way out of debt.

“This Government should look at managing the country better, reduce the wastage, eliminate the corruption, diversify our economy and make the Bahamas open for business, and allow for doing business to be easier and efficient as opposed to being a turn-off for locals and foreigners.”

Mr McCartney was speaking after Tribune Business revealed several of the enhanced tax enforcement/compliance measures proposed by the Government in association with the 2016-2017 Budget.

Apart from shortening the ‘window’ for VAT payments by a week to 21 days, the Christie administration is also proposing a much more stringent filing regime - and penalties - for the shipping, importing and courier sectors.

The Government also wants to “adjust the requirement of the Tax Compliance Certificate” to cover major shareholders in a company.

This means that all shareholders owning greater than 20 per cent of a firm’s equity will also need to be fully paid-up with their taxes for the company to obtain a TCC.

And, in a bid to ensure group affiliates and subsidiaries are also compliant, the proposed Financial Administration and Audit Act amendments also extend the TCC requirements to cover “companies with similar shareholders”.

Then there is the Government’s move to enforce compliance with Budget reforms enacted last year, with companies now required to produce a Tax Compliance Certificate (TCC) to obtain payment for goods and services ALREADY supplied to its agencies.

Companies now have to prove they are compliant with all their taxes by submitting a TCC prior to receiving payments on public sector contracts worth more than $10,000. With TCCs only valid for one month, businesses face having to prove their ‘good standing’ every month to receive payment.

Many in the private sector are viewing this as regulatory overreach or overkill by the Government, and symptomatic of its desire to collect every cent of revenue due.

And, in so doing, it will further cripple the ‘ease of doing business’ and burden Bahamian companies with unsustainable compliance and administrative ‘red tape’.

K P Turnquest, the Opposition’s finance spokesman, told Tribune Business: “It indicates that the Government is having some tremendous challenges from a cash flow position.

“I think they have some serious issues, and are trying to desperately find money from everyone and everywhere, not necessarily thinking it through. It is so counter-productive.”

The Bahamas’ national debt is more than $6.6 billion and continuing to increase, although the growth rate - and size of the fiscal deficit - has decreased since Value-Added Tax (VAT) was introduced on January 1, 2015.

However, the Government has found GDP growth and cutting its spending - two of its four key ‘fiscal turnaround’ goals - more elusive.

It recently cut real GDP growth estimates for the Bahamian economy to 0.5 per cent for 2016, following a 1.7 per cent contraction last year.