By NEIL HARTNELL
Tribune Business Editor
New Zealand’s success at fiscal reform does not necessarily mean its approach is the ‘best fit’ for the Bahamas, a co-chair of the private sector’s Tax Coalition has told Tribune Business.
Emphasising that he was looking forward to meeting with the Value-Added Tax (VAT) advisors that the Government is attempting to source from that country, and learn from “the parallels” with its experiences, Robert Myers said there was “no way” the Bahamas could assume New Zealand’s policies were right for it.
Responding to Prime Minister Perry Christie, who said the Government was going to request such a team from its New Zealand counterparts, Mr Myers also confirmed that the Coalition for Responsible Taxation had submitted its “draft” tax reform alternatives to the Government last week.
And, with the Christie administration last week finally releasing the ‘dynamic economic modelling’ study by the Inter-American Development Bank (IDB)), which assesses VAT’s impact on the Bahamian economy, Mr Myers said this coming week would be “big” for the Coalition.
While declining to comment on the IDB study until he had fully read it, the Coalition co-chair said its release would enable the private sector to ‘plug in’ its tax reform alternatives and determine whether they “make sense”.
“I’m actually looking forward to that. That’s exactly the kind of constructive help we need,” Mr Myers said of the proposed New Year visit by a New Zealand VAT advisory team.
“What I’m interested in is what they did from an austerity point of view, getting their advice as to what they had to do to get the train back on the rails.
“Having honest dialogue with them may be very helpful. We may not like what they have to say, but we have to respect it.
“They [New Zealand] were downgraded, and they are one of the very few countries that have turned their situation around, so we’re very keen to be involved in that process, and be involved in some very detailed, honest discussions with their team.”
However, Mr Myers was quick to point out that merely attempting to copy New Zealand’s fiscal turnaround success did not guarantee a similar result in the Bahamas.
Noting that the Pacific Rim nation’s economy was likely much broader and deeper than the Bahamas, and blessed with a different structure, Mr Myers added: “I don’t think we can sit here and say: ‘New Zealand did it successfully, everyone can do it successfully’.
“If New Zealand did it, it will be good for the Bahamas? No, but there are parallels in everything. It’s a position of looking at what they did to put themselves right, and what we need to do to put ourselves right.
“There is no way we can say that if it’s right for them, it’s right for us. It’s ridiculous, but what we can do is look at how they got themselves right with fiscal reforms, and look at the parallels between us.”
Meanwhile, Mr Myers confirmed that the Coalition, now representing over 700 Bahamas-based businesses, had submitted its draft tax reform alternatives and recommendations to the Government last week.
This document was received at the same time as the Prime Minister called on the private sector to provide him with alternatives to VAT, and Mr Myers said the Coalition now needed access to the ‘dynamic economic modelling’ conducted by the IDB “to be sure what we’re proposing makes sense”.
The Government now appears to have granted the private sector’s wish, and is today holding a seminar to take the private sector through the model used and created by the IDB, plus explain how it works.
“Next week is a big week,” Mr Myers added, reiterating calls for the Coalition, and private sector in general, to be given more than three-four weeks to analyse the IDB study and run both its, and the Government’s, numbers through it.
“This is sophisticated economics, not a feasibility study on businesses,” he said.
“We’ll ramp up the public relations, education to inform the public. We continue to have meetings with the Government, and hopefully some progress has been made.”
Suggesting that the lack of VAT consultation had helped to bring the private sector together, Mr Myers argued that the International Monetary Fund (IMF) had backed its position that fiscal reform discussions were taking place too late.
“We know the cart is ahead of the horse,” he told Tribune Business. “That’s irrelevant now. We have to make sure we do what is right.
“It’s ho good crying over spilt milk. The only relevant question is how we get out of this mess, do it responsibly and how do we protect the economy and the consumer, and right the ship.
“It’s not a blame game. Let’s fix it, not stick a band aid on it and hope it goes away.”