The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has largely shown “little flexibility” to-date over the planned 12 percent VAT and timeline for its implementation, the Chamber of Commerce’s chief executive said yesterday.

Edison Sumner, pictured, told Tribune Business that the private sector was hoping for some “leeway” when it came to the July 1 deadline for the 60 percent rate hike’s implementation, given the significant systems and pricing adjustments it will force on many businesses.

“The Government hasn’t shown any flexibility for the private sector at large for the extension of timelines for implementation,” he said. “Some things were considered for the hotel and tourism sector that we fully support.

“We’re looking to see what kind of leeway and leverage they will allow the rest of the business community to reconfigure their systems for July 1. There isn’t a lot of time. There are many merchants that have to reprice their SKUs (stock keeping units), upgrade their financial systems, and reprice and make adjustments in their point-of-sale (PoS) systems.

“There’s going to be a lot of work required for the large companies that have to reprice thousands of products and items on their shelves.”

Mr Sumner said the narrow, 30-day window for the more than 6,000 VAT registrants to adjust their systems and pricing for the 12 per cent rate was especially ill-timed given that it coincided with the filing of returns and payments for all businesses at the 7.5 per cent rate.

“Companies not only have to prepare quarterly and monthly filings, but prepare themselves for the new VAT rate,” he added. “There’s going to be a rush, and there’s going to be pressure put on the resources of those companies to comply and have their systems ready for July 1,” he added.

“One of the things we’re hoping for, and we know the Government needs access to those funds quickly, is that the Government will give some extension to those who need it to make their systems compliant.” Besides allowing extra time, the private sector will also be hoping for compliance tolerance in meeting all requirements of the 12 per cent rate.

“It seems they’re going to be inflexible with any adjustment to the VAT rate, even though the Chamber’s position is pretty clear,” Mr Sumner said. K P Turnquest, Deputy Prime Minister and minister of finance, earlier this week ‘called out’ the private sector on alternatives to the 12 per cent VAT, and the Chamber chief acknowledged that the clock was against it on this matter.

He added that the Chamber was moving to re-engage Oxford Economics, the consultancy that had modelled the economic impact of the first 7.5 per cent VAT, to conduct a similar exercise on the likely effects of the 4.5 percentage increase.

However, with the Government needing to pass its Budget by end-June in time for the 2018-2019 fiscal year’s start, the month between its unveiling and implementation leaves little time for the Chamber and others to come up with other options for bridging a $400 million ‘funding gap’.

“We will be looking, through that exercise, at some of the alternatives to recommend to the Government,” Mr Sumner told Tribune Business. “This Budget is expected to be passed very soon.

“The Deputy Prime Minister has indicated he is open to receiving more feedback and recommendations from the Chamber and private sector. Whether we’re able to get them in time for this Budget cycle, I don’t know. Whatever we put forward may have to be considered in the next Budget cycle.”

Mr Sumner, though, said the Chamber planned to use the 60 per cent rate hike to re-examine other VAT-related issues, including the ongoing debate over ‘exclusive versus inclusive’ pricing.

“Many of the merchants have reached out to us and are very favourable to the price exclusive approach. We have made that known to the Government,” he told Tribune Business. “We’re hoping to offer feedback shortly to confirm they’re prepared to look at that.”

Mr Sumner urged the private sector to attend next Thursday’s National Conclave of Chambers of Commerce in the Bahamas, where the Deputy Prime Minister is the main speaker. He added that the event provided an opportunity for businesses to understand the rationale behind the VAT increases and other Budget measures.