0

Vat Sanctions Are 'Very Distasteful'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value’s owner has slammed the proposed sanctions regime for delinquent Value-Added Tax (VAT) payers as “very distasteful”, fearing just one mistake by staff could result in his jailing or loss of passport.

Rupert Roberts told Tribune Business that the Government “should never have been allowed” to propose travel restrictions for the owners of companies behind on their VAT payments, describing this as “very wrong”.

Suggesting that companies, and their proprietors, were exposed to punishment even for ‘honest mistakes’, Mr Roberts said just the administrative/compliance costs associated with VAT alone would increase living costs by 5 per cent.

He added that Super Value would “really have to crank up some additional costs” to meet the proposed ’21 days after month’s end’ deadline for filing, and paying, VAT returns to the Government.

Implying that it would be impossible for the 10–store chain, and his three Quality Supermarkets outlets, to meet that timeframe since it often took 30 days to compile accurate monthly sales figures, Mr Roberts contrasted the demands on the private sector with the 60-days the Government is allowing itself to provide VAT refunds.

The Super Value owner warned that consumers “will revolt” over cost of living increases if the Government went through with its VAT plans, adding that he felt the planned July 1, 2014, implementation date cannot be met.

Reiterating that there were “many, many alternatives” to VAT, Mr Roberts said he remained optimistic that dialogue between the Government and the private sector would ultimately lead to a different revenue option being selected.

“The whole private sector is against VAT. The country doesn’t want VAT; nobody wants VAT,” Mr Roberts told Tribune Business. “I haven’t come across anybody yet that wants VAT, or would be satisfied with the implementation of VAT.

“I opposed it from the first day I heard about it, because what I knew about VAT, it’s not suitable for our country, it’s not suitable for our services-based economy, and will be too expensive and troublesome to operate. That alone will put up the cost of living by 5 per cent.

“It will increase our administrative costs, and they’re [the Government] saying they’re not going to change anything. They say it should be the same or be less, but nobody understands it; only the Ministry of Finance. They’re the ones that have to explain it, to sell it to us food owners.

“There’s no way that I see it [VAT] working. It wouldn’t work in this industry. I’ve had 65 years in this industry, including when I was at school, and there’s no way, no way that I can see that working.”

Ministry of Finance officials have quoted an Inter-American Development Bank (IDB) study showing VAT will produce a 5-6 per cent inflation increase when implemented in mid-2014, yet Mr Roberts is suggesting that private sector administrative costs will generate this alone.

Others, such as Fidelity Bank (Bahamas) chief executive, Anwer Sunderji, have estimated VAT will result in a 10 per cent inflationary impact – double the Government/IDB estimate.

Mr Roberts, meanwhile, is among the first business owners to publicly campaign against VAT. Apart from media advertisements, he has also posted signs in his stores, urging: “Keep prices down. Say no to VAT.”

The fact that such a prominent and respected business owner is coming out so publicly against the centerpiece of its tax reform plans will be a concern for the Government, especially if it galvanizes others in the private sector to follow suit.

Mr Roberts also came out strongly against the proposed sanctions regime the Government plans to implement to ensure private sector compliance with VAT. Apart from the powers handed to a Revenue Commissioner, the draft legislation also gives the Government the ability to “garnish” or seize funds owed to a delinquent taxpayer by the latter’s own creditors.

The Government, via its Central Revenue Agency (CRA), will also be able to obtain a taxpayer company’s financial records from their banks, and prevent the owners of delinquent taxpayers from travelling.

The latter amendment, which is likely designed to prevent the foreign owners of delinquent companies from fleeing the Bahamas after amassing a huge VAT bill, especially aroused Mr Roberts’ ire.

“There’s parts that are very distasteful,” he told Tribune Business of the sanctions regime, “that I think the Government should never have been allowed to set. Restricting travel and things, to come out with something like that is very wrong.

“People get their backs up and say: ‘If you come for my passport, you’d better have a bigger gun than I have’. I have 50 people in my office working on figures. If they make a mistake, am I to be carted off to jail? Will they come for my passport? Am I to be judged by some political appointee who will send me off to jail?

“Our government is more responsible than that. I don’t know how they let that mistake slip out. I don’t know what they’re going to throw at us; how much mud they’re going to throw at us, and to what extent it’ll stick to the walls.”

Mr Roberts said the food industry was the “most important to the people”, and disclosed that the Retail Grocers Association was set to meet with the Ministry of Finance over VAT this Wednesday, November 20.

“If the cost of living goes up, they will revolt,” Mr Roberts said of Bahamians. “They won’t accept that. This is a consumer tax, and the customers will revolt.

“The Government is overspent and has put themselves in this predicament, but the people have also overspent and they are in a worse predicament than the Government. The Government can’t come to the people for more; they don’t have it.”

Mr Roberts told Tribune Business it would be difficult for Super Value, and others, to meet the Government timeline for filing – and paying – VAT submissions within 21 days of month’s end.

Noting that it sometimes took 30 days for his supermarket chain to compile monthly financial data, the Super Value owner said the filing timeline for the private sector contrasted sharply with the 90 days the Government had granted itself to pay VAT credits/refunds.

“They want us to do our figures in a month, and they want three months’ to do theirs,” he added. “It takes 30 days to sort of complete your figures. You can’t comply with that in 21 days.

“I can’t comply with that without really cranking up some additional costs. I’d have to import accountants from Grenada, St Kitts and Barbados and so on, where their economies have gone backwards with VAT.”

Mr Roberts had previously called for the Government to implement a sales tax as an alternative to VAT, something the Christie administration appears to have rejected because of cascading (tax paid upon tax) and tax evasions issues when the rate goes above 10 per cent.

But, again calling for the Government to assess its options, Mr Roberts said its revenue thirst could be quenched by working closely with the private sector to develop solutions.

“There’s many, many alternatives, and they will come from a unified effort with all the business sector” the Super Value owner told Tribune Business. “It could all be worked out if the Government and private sector work together, anything can be resolved.

“I think the Government has a problem, and everybody will come together to help solve the country’s problem, and the country will forge ahead as usual. I see that happening, and working together on an alternative – paying the same amount of taxation without the trouble and expense.”

Asked about Super Value’s recent advertising, Mr Roberts replied: “At least if we get a VAT tax, the public will know we tried our best to seek an alternative to VAT. I was really concerned at first, but I think there is progress and something can be worked out.

“If the voters don’t want it, what can the Government do but listen? This is the biggest outcry that I’ve heard in this country.”

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment