The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Tax Coalition’s chairman yesterday predicted it would take 12-18 months to resolve most Value-Added Tax (VAT) issues, and urged government officials not to pin blame for the new tax’s effects on the private sector.

Gowon Bowe told Tribune Business there were “some” in government circles who would try to “deflect attention” away from the Christie administration’s decision to implement VAT, and instead direct consumer anger over cost of living increases at Bahamian businesses.

Emphasising that this was not a government policy, nor emanating from the Christie Cabinet, Mr Bowe nevertheless called on the Prime Minister and his colleagues to ensure there was “no animosity” between the groups vital to a successful VAT implementation.

While the Government had decided on VAT as necessary to tackle a $6 billion national debt and $400 million-plus deficit, Mr Bowe told Tribune Business: “There are a few in government circles that will hope, and try, to deflect attention away from the fact this is a government decision.

“I think there’s some in the Government that will look to, as quickly as they can, turn it from a government matter to a business matter.

“There’s some who would like to do so,” the Coalition for Responsible Taxation co-chairman added. “That’s not something we’d like to see promoted and encouraged.

“We’d like to see it as a country decision, where our elected leaders made a decision, and we have to work together to make it as successful as we can.

“Those in charge - the Prime Minister, Cabinet ministers and policymakers - have to say this is one we to work through together, and not create animosity. There’s a lot to do.”

Business suspicions that the Government was seeking to shift the blame for VAT’s cost of living increase on to the private sector were recently fuelled by claims, particularly from grocery retailers, that public communications on the new tax were misleading.

The Retail Grocers Association (RGA), in particular, expressed fears that the Government was telling Bahamians that food prices would fall due to import tariff cuts, and the switch to the Freight on Board (FoB) calculation method.

RGA members, though, suggested these measures would result in just a 0.5 per cent drop in food costs, not nearly enough to offset the impact from 7.5 per cent VAT.

Mr Bowe yesterday said there remained much VAT-related “anxiety” in the business community, as companies made their last-minute preparations for a tax that will be introduced within 24 hours.

Agreeing that merchants might have to cope with “a bit of angst on prices” during the early weeks of VAT, the PricewaterhouseCoopers (PwC) accountant and partner said consumer education “leaves a little bit to be desired”.

Many Bahamians, he added, were unlikely to have considered VAT’s potential impact on their finances and consumption patterns until it is “in their face” at retail stores and professional services firms.

“We’re as set for it as we can be,” Mr Bowe told Tribune Business. “I don’t know if we’ve set everything in stone. There’s still a lot of anxiety and people waiting to execute.”

He added that VAT’s effects would roll out “slowly over the coming months”, and said: “Anyone who believes everything will be fine come January 2 is fooling themselves.

“It’s going to be a long time coming. It will be 12-18 months before we sort everything out.”

Numerous VAT-related issues will likely rear their heads in the coming months, and the tax is among the most frequently-amended pieces of legislation in countries such as the UK.

Still, Mr Bowe said he was “proud” of the Coalition and Bahamas Chamber of Commerce and Employers Confederation (BCCEC) for “elevating the debate” on VAT beyond the normal hostility and personal attacks, and getting all sides to focus on solutions and the way forward.

“We have not had all our wishes come true, but we’ve made inroads and are at the discussion table, as opposed to sitting at the door barking from the outside,” Mr Bowe told Tribune Business.

He is now focusing on convincing the Government of the need to sometimes “compromise” for the national good, so that issues such as VAT “don’t come across as a one-sided event, as they do at times”.

“I’m trying to encourage the Government to understand there has to be a clear olive branch between both of us,” Mr Bowe explained.

“Sometimes our preferences will prevail, and sometimes their preferences will prevail, but ultimately it’s the preference of the consumer and citizens that will prevail.”