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Formal Economy 'Overpaying' Its Share Of Taxes

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Poor compliance, caused by corruption, limited accountability and a lack of enforcement, has resulted in the Bahamian formal economy paying a disproportionate share of this nation’s taxes.

Speaking with Tribune Business following a presentation at the 11th Abaco Business Outlook confereence, Robert Myers, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said that had compliance with existing taxes been at 75-80 per cent, there would be no need for Value-Added Tax (VAT).

“Compliance is absolutely critical, not just VAT compliance but all taxes are just critical,” he said.

“If we are not paying our fair share of taxes, then taxes have to go up. Frankly, the private sector is overpaying its share of taxes. The problem is that there is a lack of accountability and enforcement of the rule of law.

“Compliance is low and those that are paying taxes are overpaying because we have to make up for all of the ones that don’t pay.”

Mr Myers added:”That’s why we said in the VAT campaign that if you got compliance to 75 80 per cent, you would not even need VAT because that shortfall alone is more than $500 million a year.

“We’re sick of paying taxes. If you keep piling on more taxes you are going to put people out of business altogether. That is only going to turn the economy into a black market economy. There’s a delicate balance that needs to be struck and we have to be very cognisant of that balance.”

Mr Myers said that with the Government now set on moving forward with VAT at 7.5 per cent come January 1, more focus must be placed on fiscal and energy reform.

“GDP growth is only going to happen if we can become competitive,” he added.

Mr Myers said government stability was as important as the economy itself. “You have heard recent comments from the IMF and ratings agencies, as of late, talking about the threat of devaluation,” he added.

“These are very scary and real concerns. If we don’t address the Government’s concerns and the private sector’s concerns, those are the places we will end up.”

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