The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s co-chair yesterday expressed hope the Bahamas was not so far behind as Value-Added Tax (VAT) “pessimists” believe, ahead of a “full day” meeting today to tackle multiple unresolved issues.

Still taking a more downbeat approach than the Government (see article on Page 3B today), Gowon Bowe told Tribune Business that while progress had been made, the Bahamas was still far from the point where implementation would be smooth.

He expressed “disappointment” that the Government was only this week releasing the VAT Rules, which had been billed as “integral” to the underpinning the tax’s operation, given that there were less than two weeks to go before the January 1 implementation.

Contradicting Michael Halkitis, minister of state for finance, Mr Bowe said the private sector believed there were “multiple” VAT concerns that remained outstanding, and that previous Government-created lists of these issues had been inadequate.

Yet he reiterated that the Bahamas “doesn’t have a choice” but to press on with VAT and wider fiscal reform, and called on both the Government and private sector sides to be “mature” over the need for compromises and a “happy medium”.

Mr Bowe explained that the Coalition for Responsible Taxation and its industry group members had been compiling lists of VAT concerns they wanted to resolve for the past two weeks, after the Government’s efforts to do likewise “did not meet expectations”.

“We were able to indicate to them that it fell short of what we knew to be outstanding matters,” he told Tribune Business. “We have presented to them a very clear understanding that a lot if left to be resolved.

“We hope they understand the urgency of this, and if there is not a meeting today, they put all matters on the table and we work collaboratively to resolve them as opposed to being at odds.

“We have to make sure at this point in time that all parties listen, and it does not go in one ear and out the other. There has to be understanding on both sides.”

Mr Bowe said the Coalition hoped to meet today with the Ministry of Finance and its VAT Unit to go over these concerns, and expressed hope that Prime Minister Perry Christie and Michael Halkitis, minister of state for finance, would be able to attend at least part of it.

The Tax Coalition co-chair, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, indicated that the Government had hinted the meeting might have to be pushed to Monday.

Meanwhile, Mr Bowe described the sentiments expressed by Dr Don Brash, the New Zealand tax consultant, that the Bahamas had made tremendous progress on VAT, as “relative” and that they needed to be placed into proper context.

“If you compare it to where we were in April [when Dr Brash was last here], we’re much further ahead,” he told Tribune Business. “If you compare it to where we want to be in January, the truth is we have a lot of work to do.

“We were significantly behind in April, and are still behind, and hopefully we are not as far behind as some of the pessimists believe.”

The Government announced yesterday that the VAT Rules, which it is relying upon to deal with much of the remaining uncertainty, will finally be circulated this week.

“The one thing we’d highlight is that the timing is less than two weeks” before January 1, Mr Bowe said.

This meant there was “little opportunity” for the private sector to become familiar with them before implementation day, and Mr Bowe added: “Those Rules will described as integral to the legislation, and it’s a little disappointing that we’re only getting them at this point in time.”

While “multiple issues” are still outstanding, Mr Bowe reiterated that ‘we are where we are’, and that it would “not be a smooth implementation” for VAT.

“There’s no point in worrying about where we are today,” he added. “We have to push ahead and give the best policy advice to government, and hold them accountable. From the Government’s perspective, we hope they do what’s in the country’s best interests.

“I wouldn’t say it’s [VAT} a set in stone type of initiative. This is something new for us all.”

Mr Bowe called on both the Government and private sector to show maturity, with the former not getting defensive and reacting negatively to constructive criticism, and the latter realising “not every element is up for negotiation”.

“I’m taking it from the perspective that we don’t have a choice,” he told Tribune Business. “We’re going to have significant challenges, but there are enough persons willing to set aside differences and work in the national interest to make it happen.”

However, Mr Bowe added that the Coalition was “still pushing” for a Fiscal Responsibilities Act and Freedom of Information legislation.

“They are going to be critical to make sure this is a success,” he told Tribune Business. “They have to be put in a progress plan so we are moving all things forward, and not just focusing on VAT but looking at wider fiscal reform.

“We’re not going to let up on that. Tax reform is one side, but we have to bear in mind that this is not a one horse pony, and a number of other things have to take place.”