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'No Doubt Over Vat Chaos' On January 1

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.

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