The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday urged to abolish Business Licence fees and cease “nickel and dime-ing” taxpayers through streamlining numerous “little middling” levies.

K P Turnquest, the Opposition’s finance spokesman, told Tribune Business that Business Licence fees, in particular, “make no sense” because they are based on a company’s gross turnover rather than profitability.

He also argued that the Government needed to eliminate numerous small transaction taxes, such as fees and Stamp Duty on items such as Automatic Teller Machine (ATM) and bank withdrawals, on the grounds that it will boost the Bahamas’ ‘ease of doing business’.

Mr Turnquest suggested that the Bahamian taxation system required consolidation, and greater efficiency, after Tribune Business revealed that this nation had been ranked as a ‘world leader’ for several unwanted indicators.

The World Bank’s ‘Paying Taxes 2017’ report said the Bahamas and its private sector had suffered the greatest increase, out of 190 nations, in the time they now have to spend on tax compliance as a result of Value-Added Tax’s (VAT) introduction.

This nation was also co-leader, alongside Croatia, when it came to the greatest increase in tax payments, again due to VAT - an outcome that Mr Turnquest found “surprising but not surprising”.

“I am surprised we are a world leader,” he told Tribune Business of the ‘Paying Taxes 2017’ report’s findings, “but then again I shouldn’t be, because we have so many taxes, some of which don’t make any sense and can be amalgamated into other streamlined forms of taxation.”

Asked to identify such taxes, the FNM’s deputy leader responded: “The Business Licence basically makes no sense in how it is done. It’s on gross turnover, which doesn’t take into account the expenses necessary to make that revenue.

“You can also look at Stamp Duty, transaction taxes on bank fees, withdrawals; those little middling taxes all over the place. It seems to me that we should streamline that and have as few tax points as possible.

“It will be simpler, more efficient, easier to track and easier to audit. That may mean that the rate on the taxes you settle on increases to account for it, but at least the Government will not have to nickel and dime people on the small things.”

Mr Turnquest’s calls echo comments in Tuesday’s Tribune Business by Organisation for Responsible Governance (ORG) principal, Robert Myers, who suggested that the Bahamas reduce “inefficient taxes across the board”.

He said the Government’s VAT earnings, at a gross $852 million over the first 18 months, had exceeded expectations and given it scope for reducing other tax and fee streams - as it had promised in its 2013 tax reform ‘white paper’.

Mr Myers returned to the theme yesterday, advocating that the Government abolish Business Licence fees in line with that 2013 commitment to reduce them to a flat $100 ‘across the board’ charge once VAT had bedded in and was delivering predictable income streams.

“Let’s reduce the amount of taxes and create an efficient tax structure,” he told Tribune Business. “They said they would get rid of Business Licences and move it to $100. Let’s do that.

“We’ve made more money than we thought in VAT, so let’s do away with Business Licences. We can lower the number of taxes, the cost of taxation to business, and look at it much more carefully with the mindset of improving our global ranking.”

The private sector has long argued that Business Licence fees represent one of the most inequitable forms of Bahamian taxation, given that they are calculated as a percentage of gross turnover rather than profits.

This has resulted in many companies paying more in Business Licence fees than they earn in annual profits. And it has resulted in high turnover, low profit margin businesses such as food stores and gas stations, plus those impacted by price controls, paying considerably more than low volume, high profit margin companies.

However, Mr Myers said the relatively high VAT compliance levels would help encourage the Government to move away from “less efficient taxes”.

He added that in return for increasing the existing 7.5 per cent VAT rate by a single percentage point, the Government slash existing Customs duty rates by a blanket 4-5 per cent, so that the tax burden on Bahamian consumers and businesses was not increased.

“This should be a process, and one we all benefit from,” Mr Myers told Tribune Business yesterday. “It’s not us and them [the Government].

“We all need to benefit and improve the ease of doing business, making taxation more efficient and removing inefficient taxes.

“This will help the economy and the Government,” he added. “It’s going to make for a stronger economy, and not just stronger government revenues and income. What we’re trying to do is create a stronger economic environment across the board; not just for government, but for businesses, government and the citizenry.

“That’s only going to happen if we start to remove these inefficiencies and make it easier to conduct business. In my mind, we definitely seem to be moving in the right direction, but not near fast enough.”

Mr Myers reiterated that the Bahamas also needed to become “a modern society” through developing “a much more inclusive form and culture of governance”.