The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A top World Trade Organisation (WTO) official yesterday said that replacing Customs duties with Value-Added Tax (VAT) would place the Bahamas on a ‘level playing field’ with its Caribbean neighbours, allowing for the favourable tax treatment of exports.

David Shark, the WTO’s deputy director-general, said the Bahamas’ continued ability to levy VAT on imports, while exempting exports, could address a competitive advantage that several regional rivals currently enjoy.

Emphasising that the Bahamas’ fiscal policy was “is its own business” while speaking with Tribune Business yesterday, Mr Shark said the only obligations that the WTO has with respect to fiscal policy are that taxes be implemented in a “non-discriminatory way”.

He also suggested that there was no pressure on the WTO’s part for the Bahamas to accede.

Speaking on the relationship between the Government’s tax reform efforts with respect to VAT and the Bahamas’ obligations under the WTO accession process to full membership, Mr Shark explained: “Having a VAT system can be important in terms of the Bahamas competitive position vis-à-vis your neighbours, because when you have a VAT you can charge VAT on imports and you can relieve the VAT on exports.

“To the extent your neighbours are already able to do that, you are addressing a competitive advantage of your competitors.”

Mr Shark further noted: “The Bahamas’ fiscal policy is its own business. The only obligations that the WTO has on fiscal policy is that they  be implemented in a non-discriminatory way. What the Government of the Bahamas decides it wants to do in terms of taxation policy, what’s taxed, what levels, how they do it, it’s their business.

“It’s the business of the Government and the people of the Bahamas. It’s true that through joining the WTO, where one of the commitments is the progressive liberaliaation of tariffs, that becomes less accessible as a revenue source, and that’s something that I’m sure is on the minds of the Government.

“I don’t think it’s the only thing; there are a lot of other things that come into play  when the Government considers the best path to follow in terms of fiscal policy.”

  Some in the private sector have suggested that this nation’s World Trade Organisation (WTO) accession should be delayed and be brought in line with VAT implementation.

““There are countries that have joined the WTO without VAT. Right now, the Bahamas is the only member of Caricom that is not a member of the WTO. I would think that that creates a bit of a competitive disadvantage, not only in imports or exports but also in attracting investment,” said Mr Shark.

“The timing of the process is really up to the acceding country. You don’t have the WTO saying you have to sign up at this or that date. You get to a certain point where you are making progress, and if you just let it sit there then sometimes you get complications going in that you could have avoided had you finished the process.

“Members of the WTO are ready to work with the Government of the Bahamas to do this as soon as it is within the comfort level of the Government and the people of the Bahamas.”