The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday warned that throwing out “information hand grenades” without a supporting education platform in place was leading to the spread of dangerous “misinformation” on Value-Added Tax (VAT).

Robert Myers, a Tax Coalition co-chair, suggested that the Christie administration slow down its issuance of the VAT guidance notes that were causing many in the private sector to “panic” and misinterpret how the new tax will work.

He told Tribune Business that the Government had to avoid an “Obamacare situation” over VAT implementation, warning that rushing to hit the January 1 target date could result in systems/processes that did not work or were not easily understood by the private sector.

Speaking after a Coalition for Responsible Taxation meeting, in which the private sector identified key VAT-related problems that it needed to engage the Government on, Mr Myers said the delay in launching a comprehensive education/training programme remained a “big issue”.

Disclosing that the Government had yet to release the VAT training modules and education curriculum to either the private sector or three-person Task Force that it pledged to create in May, Mr Myers said: “The misinformation out there is very dangerous.

“What’s happening is that they’re [the Government] releasing these notes, they’re handing out these information hand grenades, people are interpreting these things rightly or wrongly, and are trying to decipher them with no education platform at all.

“That’s why we’ve said we need to be careful about when and what we disseminate. Guidance notes are important, but that ought to be happening in conjunction with an information platform on how to register.”

Mr Myers said the Ministry of Finance and its VAT Department had yet to provide mandatory registrants, those businesses with turnovers exceeding $100,000 annually, with details on where and how they were to register to pay the tax.

While stopping short of saying it would be impossible for the Government to achieve a smooth VAT implementation by January 1, Mr Myers said it needed to get the education curriculum/modules into the right hands.

“They’ve got to get us to help them,” he told Tribune Business. “They need to speed up on that stuff, and slow down on the guidance notes that everyone is panicking about.

“Because we are so far behind the 8-ball, and we’re rushing to get things done, we’ve got to be mindful that we don’t get an Obamacare situation, as we will not get full VAT compliance.

“We’d be better off pushing the date off a bit and getting greater compliance, rather than hitting a date that is not attainable and getting chaos.”

US president Barack Obama took heavy criticism after his signature healthcare reforms were bedevilled by system problems that prevented applicants from registering via the Internet.

Urging the Government to avoid repeating the Obama administration’s mistakes in the context of a Bahamian VAT, Mr Myers said the amount of education, information dissemination and training left to be done was immense.

“If we don’t even have education curriculum packages at this point, we’ve got a real problem,” he added, “which is why the Education Committee is asking every day: What’s happening? What’s going on?

“They’re asking for the education packages and modules. These are not coming out, so we can’t get anything down the pipe.”

The Coalition’s meeting yesterday also expressed “great concern” about the Bahamas’ large informal economy, and the extent to which businesses and persons operating in it would largely escape the VAT net.

Mr Myers told Tribune Business that the informal economy’s size needed to be reduced, and legitimate taxpayers had to be “protected” from it via a transparent mechanism that revealed who was failing to pay due taxes.

“There was a lot of concern about the formal economy being taxed more than the informal economy,” he said. “If there’s no willingness to do a Freedom of Information Act, what vehicle are we going to use to police people and ensure they are paying their taxes?”

Mr Myers said the fact real property tax and import tariff compliance was less than 50 per cent proved the Bahamian informal economy was “massive”.

Urging the Government to rapidly implement the Central Revenue Agency (CRA), in the belief it would both detect and deter much ‘underground’ economic activity, Mr Myers added: “There’s got to be some form of transparency so the private sector can see the informal economy is going to be shut down.

“Let’s share the list of tax registrants and make sure they’ve paid NIB, real property tax and Business Licence fees. If not, we need a transparent mechanism to make sure they are shut down.”

The Tax Coalition also questioned how the Government would “police” non-VAT registrants, namely those companies with less than a $100,000 annual turnover, and ensure they complied with their obligations.

“As we are getting closer to the start line, these are things becoming more and more evident as we understand the legislation, regulations and guidance notes.”