The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Delaying Value-Added Tax’s (VAT) implementation beyond January 1 was yesterday branded “a double-edged sword”, with the Tax Coalition’s co-chairs calling on the private sector to treat this possibility as “a blessing not an expectation”.

Robert Myers told Tribune Business that every day the Bahamas delayed moving on tax and fiscal reform, the greater this nation’s multi-billion dollar national debt and deficits became.

He urged both the Government and business community to “keep the pressure on” for January 1, 2015, implementation, even though they effectively have 10 weeks to largely complete all the necessary arrangements.

Mr Myers said VAT implementation should only be delayed if it was clear strong compliance with the new tax would not be achieved.

He was effectively backed by fellow Coalition for Responsible Taxation co-chair, Gowon Bowe, who told Tribune Business that it should be the Government’s decision alone on whether VAT implementation should be delayed again.

But, while admitting that January 1 remained “a stretch target” for both the Government and private sector to hit, the PricewaterhouseCoopers (PwC) partner said the prospect of any delay should be treated as “a Christmas present”.

Mr Bowe called on all Bahamian businesses to get themselves ready, and warned that they “have to go” on the assumption January 1 will be the implementation date.

“If they think we’re ready to go by January 1, it’s a decision we’ll leave to them,” Mr Myers said of the Government. “Let’s keep pushing towards the deadline, that’s the smart thing to do, considering government debt is not falling.

“It’s a double-edged sword, because to push it [VAT] back means the debt grows.

“We need to make sure we do it [VAT] as quickly and efficiently as possible, and ensure we have the greatest compliance possible. Let’s keep the pressure on, do the best we can, and if it looks like we’re not getting the best compliance because the system is not ready, we’ll make that decision when we get there.”

The Government has intensified its VAT readiness efforts over the past two weeks, staging numerous educational seminars for accountants and business executives. The VAT Education ‘Task Force’ was supposed to hold its first meeting this week, while a team from the International Monetary Fund (IMF) and its CARTAC (Caribbean Regional Technical Assistance Centre) are also in Nassau to provide assistance.

Apart from needing to arrest the continued growth in a $5.5 billion-plus national debt, and a deficit estimated to be $443 million in the 2013-2014 fiscal year, a second VAT implementation delay would also threaten to undermine the Bahamas’ policy credibility with international investors and the rating agencies.

Whether a downgrading of the Bahamas’ sovereign creditworthiness - which currently stands two notches above ‘junk’ status - would automatically follow is unclear, but the Government would be unwise to take the risk.

Mr Bowe, meanwhile, said the Government was “wise” not to “take its foot off the gas pedal” when it came to VAT preparations.

He called on the Christie administration to “stand firm for January 1”, and focus on the education campaign roll-out and registering all companies with an annual turnover exceeding $100,000.

Any implementation delay, Mr Bowe added, needed to come from a government rather than private sector perspective.

“This should be the only element that delays it beyond a reasonable time,” he told Tribune Business. “Any shift in date has to do with the lack of government readiness; it has to be on that basis.

“Businesses have to go on the premise that January 1 is the day. They have to be ready. If there’s a reprieve, that’s a blessing as opposed to an expectation. Go on that basis, and be thankful for the Christmas present if it gets delayed.

Mr Bowe added: “I still see it [January 1] as a stretch target. I wouldn’t say anything has happened to make it more realistic, but things are taking place to make it a possibility.

“It is a mammoth exercise and is going to require countless late nights and hours by the VAT administration team. They are gearing up for that, and are preparing to do so.”

The Tax Coalition co-chair expressed hope that the Government was setting out the VAT ‘milestones’, and “each step” it had to accomplish between now and year-end.

There are just over three months for the Government and private sector to work out as seamless a VAT implementation as possible, with the Christmas season likely to cut this to around 10 weeks or two-and-a-half months at maximum.

Mr Bowe urged the Government to “do all in their power to achieve the target they’ve set”, and communicate any change to the January 1 implementation date “as soon as possible”.