‘No doubt over VAT chaos’ on January 1

Dionisio D’Aguilar

As of Tuesday, July 1, 2014

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known businessman yesterday said he had “no doubt” the Government will be unable to seamlessly implement Value-Added Tax (VAT) come January 1, suggesting “chaos” would result from failing to promptly educate the private sector.

Dionisio D’Aguilar, Superwash’s president, told Tribune Business that more than a month had passed since the 2014-2015 Budget’s unveiling, but the Christie administration still had to release the operational details for the revised 7.5 per cent tax.

With exactly six months left until VAT’s implementation, the former Chamber of Commerce president expressed concern that the Government had yet to restart the consultation/educational push post-Budget.

Mr D’Aguilar said the private sector had “come to terms” with a 7.5 per cent VAT, even though it disliked it, but was now anxious to assess the “devil in the detail”.

“Time is ticking. I don’t think they’re going to meet that January 1 deadline. I have no doubt about it,” Mr D’Aguilar told Tribune Business.

“This takes focused, full-time attention to make this work by January 1, and that ain’t happening. They can implement it, but it will be chaos.

“It’s starting to get to the point where there’ll be chaos come January 1. It’s a new tax, and we need to get everybody on board.”

Mr D’Aguilar’s sentiments were similar to those expressed to Tribune Business last week by Gowon Bowe, the Coalition for Responsible Taxation’s co-chairman, who said the group had warned the Prime Minister that “the clock is ticking” on ensuring the Bahamas is ready for VAT.

The revised VAT Bill, plus accompanying regulations, guidance notes, a revised list of ‘exempt’ products and services and a new Tariff schedule have all yet to be released to Bahamian businesses and wider society.

Nor has the Government appointed the three-person, private sector-led ‘Task Force’ that Mr Christie promised in his Budget address would lead the VAT education campaign, equipped with a $150,000 budget.

John Rolle, the Ministry of Finance’s financial secretary, did not return Tribune Business’s phone calls and messages seeking comment. While Michael Halkitis, minister of state for finance, could not be reached.

However, Mr D’Aguilar suggested that the Government appoint Mr Bowe and his fellow Coalition co-chair, Robert Myers, to jointly head the Task Force.

He described them as the “level headed, right minded” persons required for such an undertaking, adding that they should be supported by civil servants in their work.

“The first time the Government came up with VAT, they did it in a bubble,” Mr D’Aguilar told Tribune Business. “This is what governments do.

“They get in a bubble and try and impose on people what 10-20 bureaucrats think is the best thing. It behooves them to sit down with the private sector and draw up these regulation. It’s less than six months away.

“The private sector is committed to participate in this process. It’s a classic example of the Government so scared of giving up control. Appoint Robert Myers and Gowon Bowe to head up an implementation committee and get on with it. We’re all Bahamians, working for the same cause.

‘“They’re [the Government] likely to run into the same push back and resistance as they did in the first place if they don’t involve the private sector.”

Pointing to New Zealand’s 18-month consultation period prior to VAT’s implementation, the former Chamber president said the Bahamas was effectively giving itself six months or one-third of that time.

That may be harsh, given that many businesses gleaned a working knowledge of VAT under the old 15 per cent model, but time is already working against the Government - especially as many business ‘decision makers’ start to head off for their summer breaks.

This reduces the education/consultation window still further, and sectors such as the auto industry - which are on four-five month advance ordering cycles - say they need to know the VAT details by end-July to properly plan for the New Year.

Otherwise, they are likely to be extremely cautious on 2015 inventories, something that will impact government tax revenues as well as consumers.

Calling on the Government to “get on with it” and empower its so-called Task Force, Mr D’Aguilar said: “They’ve already lost a month.

“If they want to get VAT in by January 1, get on with governing and involve the private sector. If there’s anything to be learned from the New Zealanders, it’s let the private sector run the process. Gowon Bowe and Robert Myers won’t hijack it.

“We’ve got to see what the level of exemptions are. That should be done by the implementation committee. If you have private sector involvement, you have a greater chance of acceptance and consensus than if you slam it down their throats.”

The Government has yet to begin registering VAT-paying businesses, or inform them about how they will be able to pay and interface with its IT system.

Pricing, accounting methods and the timing of VAT recognition all require further clarification that has yet to be provided by the Government.

John 9 years, 10 months ago

The only thing I know about VAT is everyone hates it and everything will cost at least 7.5% more.Who owns that business on the corner of that has all the billboards advertising 10% but when you go there they have an excuse not to give the discount. Talking about purchases in the hundreds of dollars. Scam was going on since March.

B_I_D___ 9 years, 10 months ago

100% guarantee that a January 1st implementation for 2015 would be a disaster of epic proportions. No so much because of the tax itself, but the fact that the infrastructure and knowledge to figure it all out will be next to nil...and oh yeah...let's launch an all new tax system, on one of the biggest holidays...pure genius that one!! Let's see all the Junkanoo boys shake off New Year's Eve Junkanoo and make sure there business are all ready for the cross-over on the first. For MOST normal businesses they will be closed on Thursday January 1st, people will open for Friday January 2nd. What do the bars and restaurants do that are going to hos New Year's Eve bashes? Do you close out people's tabs at 11:59pm, then start up a fresh tab at 12:00am...and who is going to have the IT staff on hand at that precise moment to make the changes in the software? Look at Mr. Robert's example...he is going to have to go through how many systems and price changes in his stores overnight essentially? January 1st is a BAD idea, even if the education and preparedness was there...knowing it is NOT going to be ready...it's going to be one colossal mess!!

GrassRoot 9 years, 10 months ago

good points BID. Lets think about that on 29th of December.

B_I_D___ 9 years, 10 months ago

...That's probably when the government will start telling people what needs to be done and how...

asiseeit 9 years, 10 months ago

You want these dolts to actually LEAD? Come on this is the Bahamas, the ones we elect to LEAD are NOT leaders. They do not know what the word means much less how to actually be a LEADER. They are the bottom of the barrel NOT the cream of the crop! They are the tax CHEATS not the upstanding citizens most Bahamians are. They are the payback kings not the ones that look for SAVINGS and the BEST for the country. They are EVERYTHING that is WRONG with this country. The saddest part of the whole thing is that they have a large majority of Bahamians still believing they are GODS because they belong to a political party, to HELL WITH THE BAHAMAS, IT is about MY (PLP/FNM) PARTY and the people that support me and mine! Lets see how long that works before all hell breaks out? Think we can do another 40 years of the same old, same old?

carlh57 9 years, 10 months ago

your so right! And while we have no leaders to actually LEAD, on the world stage the Bahamas is looked upon as a joke. bumbling, childish, kids "playing dress up" trying to be adults.....all because of inept and buffoon politicians (regardless of their party affiliation)....sad sad sad...

Cornel 9 years, 10 months ago

Remember that on January 2, 2015 the VAT rate will be increased to 15%

proudloudandfnm 9 years, 10 months ago

Just the fact that the PLP say they can do this by January proves just how amateur and ignorant they actually are.

ANYONE WITH A HINT OF COMMON SENSE KNOWS THIS CANNOT HAPPEN BY JANUARY...

proudloudandfnm 9 years, 10 months ago

With the PLP in charge VAT will cost more than it takes in, by at least double. They simply cannot do anything properly.....

Well_mudda_take_sic 9 years, 10 months ago

Calm down little Poodle and JUST SAY NO TO VAT. The last thing we need is a horribly regressive VAT. Revenue needed by Government must be obtained by: (1) Aggressively pursuing real property tax arrears on all properties with a current value in excess of $1 million; (2) confiscating the assets (proceeds of crime) of all the known numbers' bosses like Craig Flowers; (3) introducing a National Lottery to help fund a large portion of our public education system; (4) clamping down on the enormously costly corrupt leakages in our current system of customs duties; (5) discontinuing the grant of concessions to foreign investors which are not contingent on or tied in some reliably measurable way to the value of the expected benefits to be derived by the country as a whole; (6) doing away with the corrupt practice of government leasing property from political business cronies at outrageous rents rather than fixing up and properly maintaining existing government owned properties; (7) shutting down Bahamasair and BCB; (8) privatizing BEC with a maximum 10-15 year limited monopoly period tied in some meaningful way to an obligation to generate affordable electricity for all consumers on the 8 most populated of our islands; (9) privatizing of W&S Corp. with a maximum 10-15 year limited monopoly period once again tied in some meaningful way to an obligation to provide affordable potable water for all consumers on the 8 most populated of our islands; (10) doing everything possible in concert with the U.S. government to reduce the number of illegal immigrants that our suffocating our country today; (11) revisiting the overly generous "cost plus 10%" concession and 20+ year monopoly granted to the Arawak Cay Port Development owners of the Nassau Container Port facility which are wreaking inflationary havoc on food and everything else imported to our country; (12) doubling the existing taxation of all tobacco, liquor, wine and beer products which are responsible for a very large component of our country's healthcare costs today; (13) stopping the grossly abused free gas allowance that many senior civil servants and their family members currently enjoy; (14) ending the policy of buying anything but economy automobiles for the most senior civil servants, members of parliament, senators, judiciary members and the police; and so on and so on. WE SIMPLY NEED TO STAMP OUT AS MUCH CORRUPTION AS POSSIBLE WHILE SIMULTANEOUSLY PUTTING IN PLACE SENSIBLE ECONOMIC AND SOCIAL POLICIES FOR THE LONG-TERM AS OPPOSED TO THE SHORT-SIGHTED ONES WE HAVE TODAY THAT CHANGE WITH EACH AND EVERY CHANGE IN GOVERNMENT. At some point within the next 5-7 years we will need to introduce a highly progressive system of income tax for all residents of the Bahamas and business activities within the Bahamas in order to properly diversify the tax base of our economy (we should be planning for this now as it will be necessary whether we like it or not).

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