By NEIL HARTNELL
Tribune Business Editor
The Tax Coalition’s co-chairman yesterday blasted the proposed sanctions for Value-Added Tax (VAT) non-compliance as exposing an “absurd” double standard, warning the Government it was placing “undue pressure on the private sector”.
Robert Myers, who jointly leads the Bahamas Chamber of Commerce and Employers Confederation (BCEEC) formed body, questioned why the Christie administration was so keen to enforce such draconian measures on the business community when its own agencies/departments were already guilty of non-compliance.
Questioning why government agencies/departments, and their officials, had not been hit with the same penalties for failing to collect and enforce existing taxes, Mr Myers said the Government was now asking the private sector - through VAT - to do what it had not been able to.
The Tax Coalition co-chair added that he had spoken to several businesspersons yesterday who were close to losing it” over their VAT concerns.
Ministry of Finance officials this week confirmed that several VAT non-compliance offences may result in both fines and imprisonment for up to two years. Fines for individuals are proposed at between $12,000-$25,000, while those for companies extend from $25,000 to $150,000.
Setting out the proposed sanctions regime at this week’s Bahamas Institute of Chartered Accountants (BICA) conference, officials said measures included the ability for the Central Revenue Agency/VAT Unit to issue ‘third party liability notices’ to registrant’s banks to obtain their financial details.
The Government will also be able to attach a lien over monies owed to alleged VAT non-payers by third parties, plus seize their goods and assets to make good the sums outstanding.
“There’s a few insidious things in there,” one private sector source told Tribune Business yesterday. “They have the ability to reach into your bank account, and tie in all the monies owed to the Treasury. They can hit you up for real property tax.”
With outstanding VAT sums acting as a ‘first charge’ over a company’s assets, the sanctions regime also proposes that delinquent taxpayers be “restricted from travel” until all that is owed is paid up.
That, as Mr Myers and the Nassau Institute’s Rick Lowe suggested yesterday, is likely to be challenged in the courts on constitutional and human rights grounds.
But, as a final step, the VAT sanctions regime also proposes the enforced shutdown of companies that “refuse to pay taxes”.
Mr Myers, while acknowledging that such a move represented a reasonable ‘ultimate sanction’, questioned why this step was not being used to enforce the existing tax regime.
“That one, closing a business that doesn’t pay, makes sense, but why don’t you start enforcing that now?” he asked.
And Mr Myers suggested that the sanctions regime effectively highlighted a ‘double standard’ between what would be inflicted on the private sector for non-compliance, and the current ‘free ride’ given to the Government’s own poorly-performing revenue agencies.
The Tax Coalition co-chair emphasised that with VAT, the Government was effectively asking the business community to do what it has not been able to - efficiently collect, report, administer and remit its taxes for it.
“Why is it that the penalties on the private sector are so much more severe than on their own civil servants, who are responsible for collecting and enforcing these issues now,” Mr Myers told Tribune Business.
“The Government has deputised the private sector to collect the taxes that their own civil servants have failed to collect for years. Now it’s our problem to collect, and if they don’t want to penalise their own people, what does that say? Where’s the accountability?”
The private sector, Mr Myers said, would face fines and potential jail time “for doing their job of collecting their taxes.
“It’s absurd they are not held to the same accountability,” he told Tribune Business. “Why is government not held to the same fines, penalties and sentences?
“Let’s level the playing field and be fair. If they [government officials] can’t do their jobs, send your people to jail and fine them, if they want to do that to the private sector. If they can’t collect the taxes on the books now, fine them, jail them, take away their travel privileges, probe into their bank accounts. What’s good for one is good for the next.”
“They’re not being reasonable. That’s the problem here. It’s absurd. It’s putting an undue amount of pressure on the private sector. I’m OK if you enforce these sanctions on your own people the same way you enforce them on us.”
Mr Myers was backed by Mr Lowe, who said the proposed sanctions regime was likely to be another factor encouraging businesses to “sell out”.
“It’s dangerous,” he added. “It shows a tremendous level of desperation on their part, but instead of trying to figure it out reasonably, they’re taking this approach that everyone is a criminal. The ramifications are endless.”
Mr Myers said the Government’s decision to start releasing the November draft of the VAT Bill and accompanying regulations was again “putting the cart before the horse”, as it sought to move the discussion on to the details before everyone was comfortable that VAT was “the right course” to take on tax reform.
The Coalition co-chair added that the absence of the revised Tariff Schedule and studies on VAT’s likely impact on the wider Bahamian economy meant it was impossible to determine if it was the preferred option, compared to the likes of a sales or income tax.
Mr Myers said he was “almost not prepared to read” the draft legislation and regulations until the first issue was answered, namely “how sure are you that this will not have a negative effect on the economy”.
“They’re trying to tie you up and push you forward in the discussion, because if you read it you’ve indicated a willingness to go there, but we haven’t said we’re willing to go there,” he added.
“I can only assume that’s the intent of their PR campaign; to keep pushing through as if this is a fait accompli, but we don’t think it’s the responsible thing to do.”