The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas has embraced “all the enemies” of a smooth Value-Added Tax (VAT) implementation, a top QC warning that the Government’s failure to provide consistent, clear answers was helping to foster “negative” public attitudes.

Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, said the likely problems associated with the VAT transition were being exacerbated by the Government’s failure to quickly answer the numerous concerns being raised by the private sector and ordinary Bahamians.

He told Tribune Business that “conflicting” replies to such concerns were sometimes being given by different persons within the Ministry of Finance’s VAT Unit, which was only “heightening” anxiety over the new tax’s roll-out in 17 days’ time.

Mr Moree also joined calls for the swift appointment of the VAT Comptroller, noting that the “much anticipated” VAT Rules had yet to be produced because the one persons largely responsible for creating them - the Comptroller - was not yet in their seat.

With the debate having moved beyond VAT’s merits/demerits, and whether it is the best form of taxation for the Bahamas, Mr Moree said the next stage - a ‘smooth as possible’ implementation - was being undermined by inadequate education and communications.

“Whenever one is trying to introduce major reforms, uncertainty, delays and poor communications are all enemies of an efficient implementation,” Mr Moree told Tribune Business.

When this newspaper suggested that the Bahamas had ‘ticked all these boxes’ when it came to VAT implementation, Mr Moree agreed, responding: “We’ve ticked every one. That’s what I’m trying to say in a nice way.”

Agreeing that a private-public sector partnership was the best method for addressing lingering VAT concerns, the well-known QC added: “In every country in the world which has undertaken major tax reform, and which involves the introduction of new taxes, there is a transitional period that creates difficulties.

“There is no expectation that that transition would be different in the Bahamas. Consequently, I don’t think there are any reasonable voices in our country that would suggest you could implement something as large and as complicated as VAT without difficulty, and without a transition period for businesses and individuals to adapt to the new tax regime.”

Mr Moree, though, said such difficulty would likely be exacerbated by the many unresolved VAT-related questions still out there.

“What has made it particularly problematic in the Bahamas is that even at this late stage there continues to be considerable uncertainty on too many issues, and clear, consistent answers to questions are not available to the public,” Mr Moree told Tribune Business.

“In fact, the much-anticipated Rules, which are extremely important to the VAT regime, have not yet be en produced and circulated to the public.”

And, apart from the inconsistencies and differences between the ‘guidance notes’ and VAT Act and regulations, Mr Moree said: “In too many instances we get conflicting answers from persons within the VAT Unit, which only serves to heighten the anxiety of the public, and to undermine the ability of the public to properly prepare for the implementation of VAT.......

“The net effect of this is to produce a negative attitude in the public. There needs to be very urgent clarification. We need the Rules, we need the Comptroller to be appointed.

“If the country is going to move from the point of debating whether VAT is a good thing or not to focusing on its implementation, it seems to me there is a heavy burden on the Government to provide answers, clear up those areas causing confusion, publish the Rules, and be in a position to answer being put to them by the public in a clear and consistent way.”

Mr Moree warned that if the Christie administration failed to address this in the 17 days it has left, it would potentially undermine its goal of maximising VAT revenues and compliance.

“When legitimate professionals and business people are seeking answers to questions, they want to comply with the law,” he added. “So the Government must be in a position to help the public do what it wants to do.”

While he fully accepted the Government’s desire to maximise compliance and focus the VAT debate on implementation, the noted QC said this had to be backed by its responsiveness to private sector queries.

“We must all work together to ensure the highest level of compliance with VAT in the shortest possible timeframe,” Mr Moree told Tribune Business.

“This will not happen unless government agencies produce proper guidance to the public, and clear up inconsistencies. It is always difficult to implement new taxes. In any country it is a difficult exercise, but we must not approach it by not being in a position to provide clear and practical answers to questions, and clarify issues causing people concern.”