By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Bahamian businesses need “a friend in government” if they are to successfully compete post-WTO accession, with one entrepreneur arguing: “What does it matter if we have income tax?”
Peter Bates, The Sign Man’s principal, told Tribune Business he could not understand why the private sector was “so jittery” over potential import tariff eliminations/reductions because it would enable businesses such as his to “compete at a new level”.
With corporate income tax among the potential revenue replacements for Customs duties, Mr Bates said the Bahamas needed to “bite the bullet” and become a full World Trade Organisation (WTO) member to prevent potential economic isolation that would leave local exporters exposed. Among those asking questions at last week’s Chamber of Commerce-organised WTO breakfast, Mr Bates emphasised that the Government needed to truly partner with the Bahamian private sector if local firms are to compete and prosper in a liberalised, rules-based trading environment.
He argued that the preferential treatment extended to foreign companies needed to stop, and said the Government needs to address the lack of “trust” the private sector has in it for the Bahamas’ overall good.
Praising the presentation given by Raymond Winder, the Bahamas’ chief WTO negotiator, Mr Bates told Tribune Business he did not fear tax reform - and even the possibility of a corporate income tax - unlike many in the Government and private sector.
“What does it matter if we have an income tax?” he told Tribune Business. “Every country in the world has income tax. We have to bite the bullet.
“Let’s get it done, let Bahamian businesses have a friend in the Government, so there’s help and support, and we have a way to build our businesses. It’s very difficult to do that.
“I’m very supportive of moving to the WTO, primarily because we have no choice... If so, let’s figure out how to survive and live with it. Everyone wants protectionist tariffs, but there are many types of taxation. We have to get rid of duties.”
The WTO, European Union (EU) ‘blacklisting’, and the Organisation for Economic Co-Operation and Development’s (OECD) anti-tax avoidance initiatives are all uniting at the same time to drive the Bahamas towards substantial tax reform that will impact virtually every business and resident.
In the WTO’s case, it views the Bahamas’ existing import tariff regime as a ‘barrier to trade’, meaning that this nation will have to eliminate or reduce numerous duty lines - and the revenue associated with them - as part of the membership commitments it will make.
The extent, range and phased-in timing of the eliminations/cuts will be agreed with the WTO Working Group that the Bahamas must negotiate its accession terms with. Yet with the Government needing to replace the revenue foregone, and the current EU and OECD pressures, corporate income tax - as recommended by the International Monetary Fund (IMF) - is starting to loom large as a replacement option.
“Everybody in this country is so jittery about removing Customs duties and imposing income tax,” Mr Bates told Tribune Business, “but I don’t know why because we can compete at a new level without any duties. It’s up to me to source out the best price and negotiate the same trade discount” as overseas rivals.
He explained that duty reduction/elimination would make businesses such as his more competitive on freight and import costs, but acknowledged that it was critical for the Government to improve the business climate if Bahamian businesses were to be competitive post-WTO.
“We don’t need protectionist tariffs; we need protection from our government,” Mr Bates argued, “as we’re not competing on a level playing field. Our government is not a friend to the Bahamian businessman.
“It’s a friend to the foreigner; the foreigner can come in the front door, while the Bahamian has to scrape at the side door.... The Government doesn’t buy from local industry. The Government comes to me when the signs they import don’t come in right, and their shop doesn’t do it right.
“I get pretty big contracts when their signs aren’t right. I’ve met every government ministry and agency, and can’t get off the ground. I’ve submitted a lot of applications for 12 years. All the billboards, I’ve been denied.”
Keva Bain, the Government’s director of trade, told last week’s Chamber meeting that there had been a lack of participation by the private sector in WTO and other trade-related meetings over the years.
This provoked immediate push back from many in attendance, including Mr Bates, who told Tribune Business: “Nobody shows up because we don’t trust you. I said to her that we find you [the Government] don’t listen to us anyway, and half the time you’ve decided what to do already by the time of the Town Meeting.”
The Sign Man’s principal, though, pointed to the greater protection WTO membership will provide to Bahamian goods and services exporters, given that this nation would then have a forum to resolve trade-related disputes with other nations.
“We really don’t have a choice, so we might as well get it done,” Mr Bates said of WTO accession. “We’d be truly isolated otherwise. It’s a WTO, it’s a common market, so if we don’t join we’d be truly isolated. We don’t have any courts to got to for disputes. We could be cut out of any export business through others’ protectionist tariffs.”
He added that he had instructed his staff to start sourcing from the European Union (EU), rather than China, given that the Bahamas has already signed on to the Economic Partnership Agreement (EPA) with the former, thereby providing some security when it came to market access.
“There’s a niche for The Sign Man, and I will survive and flourish,” Mr Bates said. “It would be nice for the Government to sit down and tell us things we’d not figured out for ourselves.”
Comments
avidreader 6 years, 1 month ago
Why so jittery? For the simple reason that the imposition of an income tax requires a large (and presumably expensive) government bureaucracy to manage it as well as the fact that tax evasion is an art in which the rich will demonstrate their expertise with the help of foreign experts in tax avoidance. Income tax would not be so bad if the rich were willing to pay their fair share but that is very unlikely to be the case here where the political class will call a payroll withholding tax an "income tax" while their class declares very little income that is not hidden on the company's books or shielded by nominee shareholders, etc.
DDK 6 years, 1 month ago
We have corporate business licence fees based on income as it is. I do not even imagine Government would consider further taxing employees' income. Bahamians pay tax left, right and centre and many are not even aware of how much tax is extracted from their ability to survive. Replace gangster numbers houses with national lottery.
In total agreement that preferential treatment extended to foreign companies needs to cease. Give Bahamian business the chance to survive in these tough times. Giving foreigners preferential or no tariff s u c k s.
Why in hell should we be instructed to buy from EU and not China. Is it free trade or forced trade?
joeblow 6 years, 1 month ago
Politicians are notoriously irresponsible with public funds! They simply can't be trusted. They still can't account for how VAT monies are being spent!
Gotoutintime 6 years, 1 month ago
Nobody is going to pay a tax, income or otherwise, if they can lawfully avoid it. Why should they??
Sickened 6 years, 1 month ago
Once you start income tax you will also need to implement a more robust local business accounting reporting and examination because all business owners will just put a bunch of their living expenses through the business and reduce their 'salary'. Things such as housing allowance or free company housing, corporate cars and car maintenance, food allowance. We will eventually end up with 77,000 pages of tax code like in the U.S.
joeblow 6 years, 1 month ago
What difference does it make if we join the WTO or not! The Bahamas is a dumping ground for other countries products. Are we able to increase our manufacturing of goods and products to compete with countries that have had a head start for many decades? Countries with lower manufacturing and labor costs, established entryways into markets etc. I think not!
truetruebahamian 6 years, 1 month ago
There are many businesses that do not import and would not receive any benefit from the removal of customs tarrifs. These businesses would just receive another removal of already sparse receipts without being able to make up the loss through any other means.
newcitizen 6 years, 1 month ago
Every business and every individual feels the burden of customs duties. Everyone would see a decrease in cost of living and cost of doing business. This is basic economics. Please do not just jump in with a hot take on the subject if you are not informed about what you are saying.
MonkeeDoo 6 years, 1 month ago
There is no availabe accounting capacity as it is with B/L & VAT so how the hell we going to cope with more tax schemes. And look where NIB is with a year of receipts not yet posted. No one even knows the status of RPT, B/L, VAT and we have no right under law to find out where they stand. Just tell the EU "sorry boys, we are a failed State Banana Republic"
bogart 6 years, 1 month ago
Yinna mussey jokin...more tax?? ..?.if yinna cant account fer all da wastage of present taxpayer VAT an all da taxes done collected....Resolve...BoB BPL- well da bank fella did get chatge wid dem account,....w&S..people gettin millions in contracts...without law procedure followed........an nobody gone Foxhill jail yet....bey yall mussey plain crazy ...yuk up people vexation dis blessed day..talking fool bout more taxes..people strugglin..catchin hell callin it good time...suk teet
TheMadHatter 6 years, 1 month ago
We dont do enough business with the EU to make this even a subject for discussion. How about a trade deal with Iceland? Do we do much business with them? No.
Tell EU to blacklist us and all the other colours of the rainbow. We have real problems to deal with in this country and dont have time to turn the apple cart upside down to suit them. Make it known worldwide that no companies having roots in any EU country (except UK which voted to leave) is welcome to invest here.
Not welcome. Go away. Thank you.
We will be fine.
OMG 6 years, 1 month ago
A couple of points. 1. Only governmennt and registered business owners would or could be targeted. Fishermen, construction workers and the Hatien community would never pay.
2.the last government wasted the entire VAT income and bear in mind the other taxes. How the hell can you justify 10% stamp tax on property sales + plus VAT.? Look at air fare taxes USA to Naasau Approx $ 6 Nassau to USA over a $100. and what do we have to show for it ????.
Sign in to comment
Or login with:
OpenID