The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government was yesterday urged to help push small and medium-sized businesses (SMEs) over the threshold that would force them to register to pay Value-Added Tax, a leading consultant telling this newspaper that failing to do this would negatively impact national development.

Mark Turnquest, principal of Mark A. Turnquest Consulting, said that while he was an advocate for small and medium-sized businesses, he wanted to see them hit the registration threshold - be it $50,000 or $100,000 - so that they could contribute to more to the overall economy under a VAT system.

Mr Turnquest’s comments followed a recent Tribune Business article which revealed there was “strong support” within the Ministry of Finance to increase the compulsory VAT registration threshold to a $100,000 annual turnover, as it would still capture almost 98 per cent of economic activity.

John Rolle, the Ministry’s financial secretary, said the Government had yet to take a policy decision on this, but increasing the threshold from $50,000 to $100,000 would only exclude several hundred businesses.

“That is good in a way to enhance business development in the country, but when it comes to the Government making any extra money it’s going to be somewhat of a negative for the Government,” Mr Turnquest said.

“The difference between a company making $50,000 to $100,00 is not that great because there are a small amount of businesses making $60,000, $80,000 or even $90,000 a year.

“That $50,000-$100,000, there are a minimal amount of businesses making that. Either a business is making under $50,000 or it’s making over $100,000. I would applaud the Government if they increased the threshold but it’s not significant.”

Mr Turnquest added: “What the Government needs to do is determine how to develop the country in a way that they could get more money from businesses.

“Through public and private partnerships the Government needs to now think of ways for small and medium-sized businesses to get over the $100,000 threshold. I don’t see how the Government will be able to reduce the deficit, enhance the GDP, provide extra money to develop the infrastructure and other necessities if businesses stay very small.

“Right now, this is a petty shop-type economy, and working in a petty shop economy, no one is going to benefit because everyone is hiding the amount of money they make.”

Mr Turnquest said many small and medium-sized businesses were not honest about their annual turnover, and would need to be audited.

“I don’t see the Government making a lot of money. I don’t see Value Added Tax contributing to the economic development of the country unless we have many more businesses moving beyond $100,000. They have to be encouraged, and strategies developed, to move them over $100,000,” said Mr Turnquest.

“Although I’m an advocate for small and medium-sized businesses, I really want the small businesses to be making over $100,000 so they could contribute more to the GDP, and the overall economy and economic development plan could actually materialise.

“In this way, the Government could make more money, improve the Family Islands and focus on economic activities that can actually bring more money into the Treasury.

“You would have small from $100,000 to $500,000, and medium from $500,000 to $1 million, and everything under $100,000 is micro. We need to work with international organisations, private investors, venture capitalists and other financial funding mechanisms, and assist with moving these small businesses over the $100,000 threshold. The Government would receive more money and business would be making more money.”