By NEIL HARTNELL
Tribune Business Editor
The Tax Coalition’s co-chair has suggested that increasing tax compliance rates to 70-80 per cent under the existing system would eliminate the need for Value-Added Tax (VAT) or any other revenue reforms.
Speaking after the International Monetary Fund’s (IMF) Article IV report on the Bahamas revealed that both Customs and the real property tax department were performing “below 50 per cent of revenue potential”, Robert Myers said the situation was equivalent to the private sector “doing all the work and not getting paid”.
“If you had compliance to around 70-80 per cent of existing taxes, there’s no concern to be had,” Mr Myers told Tribune Business. “I’m interested to find out that if you did get compliance to those levels, what percentage of GDP revenues would be.
“Probably around 20 per cent. We’re at 18 per cent or worse because we don’t have compliance. You’re just taxing people money, but not getting the money. It’s like in the private sector, doing the work and not getting paid. We’d be out of business.”
The Government estimates it is owed more than $550 million in outstanding real property taxes alone, and Mr Myers implied that it was extraordinary to have allowed such an ‘accounts receivables’ position to build up.
“I watch receivables like a hawk. Revenue and receivables are the two things I focus on,” the Coalition for Responsible Taxation’s co-chair told Tribune Business of his own business interests.
“I do the work, collect the money, and then my eye goes to profit. It’s not profit until it goes into your bank account.”
Given that the Customs Department collects between $600-$700 million in revenues annually, with real property tax generating another $90-$100 million, the IMF’s report suggests that both these figures could at least be doubled.
If that was achieved, the Government would earn at least another $700 million annually - enough to move than cover its existing $443 million fiscal deficit, and greater than the $500 million revenue increase projected from VAT and other fiscal reforms.
Mr Myers is far from alone in urging the Government to maximise revenue earnings from its existing tax system before it looks to implement VAT and other new taxes.
Businessman Rick Lowe, a Nassau Institute executive, told Tribune Business: “My position is that Government should get its fiscal house in order first, reduce the debt-to-GDP ratio but not by getting new revenues; instead getting the revenues they should be getting.”
He added that the Government, if it still needed new revenue streams, should go to VAT at a much lower rate than 15 per cent and eliminate all exemptions and carve outs. This, Mr Lowe said, would ensure all persons paid their fair share, with those consuming more paying more.
“To implement this without getting our fiscal house in order is foolish,” Mr Lowe said. “No amount of new taxes will be helpful or useful. That’s where the problem lies, and most people give it a pass.”