The Tribune

By Annelia Nixon

Tribune Business Reporter

anixon@tribunemedia.net

The Bahamas Chamber of Commerce and Employers’ Confederation told Tribune Business they strongly oppose “even the suggestion of increased taxation” after the International Monetary Fund (IMF) proposed a VAT increase among other changes to aid the government in reaching its 2031 debt target.

“As the voice of the business community, we take exception with several of the IMF’s suggestions that would adversely impact our members. Additionally, the ambiguity of some of these recommendations leaves room for unsubstantiated speculation and conclusions that may not align with the original intent. BCCEC vehemently opposes even the suggestion of increased taxation, especially on the backs of a business community that already must contend with increases in NIB, energy costs, minimum wage, cost of procurement from suppliers, shipping costs and customs duties among other inherent challenges like theft, wastage and spoilage. Surely, given the expertise within the government’s caucus, they can devise more ingenuity for increased revenue without the incumbrance of increased taxation, especially given revenue projections for 2024/2025 of more than $3bn compounding the record revenue with consistent failure to deliver basic services.”

The IMF report suggested that both VAT and Water & Sewage Corporation tariffs be increased because “further revenue reforms” would be needed. The BCCEC, however, proposed “streamlining government spending” instead, adding that customers barely receive the quality of service they are paying for and deserve as it is.

“The report suggested recommendations to increase VAT and water costs. Increase to what percentage? What is the rationale? What feasibility study was conducted to determine that this was the best course of action? When is this proposed increase intended to be introduced and is the recommendation for a phased approach or immediate implementation? We already have the challenge of water quality, pressure and consistent supply, especially in neighbouring islands, so we question the audacity of the suggestion to increase cost with no mention of increasing the consistency of supply and service received. Instead, we recommend streamlining government spending to control expenses, which would have the same or better effect on revenue as the proposed increase taxation, without an added burden to taxpayers and businesses.”

A 15 percent corporate income tax was recommended to be applied to large domestic firms, replacing business licence fees to which the BCCEC questioned and rejected.

“Many businesses operating in The Bahamas are exempted from a fee for the issuance and/or renewal of their business licence and those that pay a fee are already subjected to the added cost of audited financials coupled with the inconvenience of the VAT offsetting practice being discontinued without prior consultation and impact assessment – a decision the BCCEC strongly opposed. Instead, we recommend continued enforcement for delinquent Real Property Tax as hundreds of thousands in collectable revenue is missed given our inefficiency of current tax measures making it inadvisable to enact new ones. With the ongoing impediments to the ease of doing business, the ever-increasing cost of doing business and lack of fiscal controls, the BCCEC [strongly] rejects this recommendation as well.”

However, the BCCEC did agree and welcome some of the IMF’s recommendations.

“The report references the domestic minimum top-up tax of 15 percent, which is a measure of fiscal equitability that the BCCEC has already provided its support for. Moreover, the publishing of beneficial ownership information of public contract awardees and audited financials for public corporations would increase fiscal transparency, so we also support this recommendation. Further, the incentivization of private sector investments, particularly outside of New Providence, would indeed expand MSME growth, arrest family island brain drains and improve crime mitigation factors, which the BCCEC has continually lobbied for over the years. Finally, the report highlighted the ease and cost of doing business. Specific reference is made to ‘expensive electricity, a shortage of skilled labour, and obstacles to business formation and expansion [weighing] on growth’. We wholeheartedly agree and call on the government to curate an environment conducive for the business community to first survive and then thrive with fiscal measures, policies and concessions designed to bolster longevity. We also call on the business community to take initiative and foster a culture of resilient ingenuity in the face of adversity, despite the regulatory challenges imposed by regulators.”