The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses are being denied “natural justice” by the absence of a properly-defined appeals process for resolving Value-Added Tax (VAT) disputes, the Democratic National Alliance’s (DNA) leader has blasted.

Branville McCartney told Tribune Business in a recent interview that VAT’s negative impact on business sales was being exacerbated by an inability for registrants to appeal, and challenge, penalties and sanctions imposed by the Department of Inland Revenue.

“There are some situations now where persons have called saying they’ve been charged thousands of dollars because they [the Government] claim they have not complied with certain provisions in the VAT Act,” Mr McCartney told this newspaper, “and there’s no type of appeal, no court to hear your grievance.

“That has to be dealt with. That is only natural justice. It does not fall within the realm of natural justice currently, in terms of there being redress or an appeal on these issues; it doesn’t fall within any legal system.”

The DNA leader implied that the absence of an efficiently-functioning appeals process that could be used by the 6,000-plus VAT registrants to resolve disputes with the Government was effectively adding insult to industry, given the tax’s impact on consumer spending and sales.

“When you have that appeals process, you can certainly challenge the way you have been penalised,” Mr McCartney said.

“We’ve missed the boat on this one. People are suffering. We continue to pay religiously, and if we don’t, there’s a problem.”

The VAT Act and accompanying regulations do provide for the creation of mechanisms, and appeal bodies, to adjudicate disputes between the private sector and the Government.

However, other business community figures have confirmed privately to Tribune Business that these bodies are either not set-up or not operating at full effectiveness.

Mr McCartney, meanwhile, said individual businesses and the wider Bahamian economy continued to suffer because of VAT and the ‘wealth transfer’ to the Public Treasury that it represents.

“We are suffering like hell because of VAT,” he told Tribune Business. “I can’t explain it any more than that.

“Business has decreased by 15-20 per cent since the introduction of VAT. I’ve seen it in the pharmacies, I’ve seen it in the law firm, and I’ve seen it in the commercial rentals, as VAT has to be added on to that.

“Persons are reluctant [to rent], so you have to reduce your commercial rental rates for persons to be able to afford to pay.”

Turning to the wider consequences beyond his own family’s businesses, the DNA leader said: “You have less employment; you can’t employ as many people as you once used to.

“Because there is less employment, less money is coming in because people have less money to spend. VAT, to-date, has hurt the majority of businesses in this country, whether it’s sales, professionals (legal), or real estate and insurers.

“If we had managed our economy properly, reduced wastage, cut out corruption and collected our taxes equitably, we wouldn’t have this same situation now.”

The Government previously revealed that it has collected $852 million in VAT revenues during the tax’s first 18 months, with the $160.3 million received during the three months to end-September 2016 taking this over the $1 billion mark for 21 months.

But, with the Government still running annual fiscal deficits in the hundreds of millions of dollars, albeit down from pre-VAT numbers, many Bahamians are questioning how their monies are being used.

VAT represents a ‘wealth transfer’ from Bahamian consumers and businesses to help dig the Government out of its debt hole, with the national debt still growing towards the $7 billion mark, even though the growth rate has been reduced.

The VAT revenues have yet to achieve the fiscal deficit’s elimination because the growth in revenues continues to be outpaced by the Government’s spending.

The Central Bank of the Bahamas, in its report on monthly economic developments for October, said of the three-month period to end-September 2016: “Data on the Government’s budgetary operations for the first three months of fiscal year 2016-2017 showed a $23 million (36.6 per cent) worsening in the deficit to $86 million, relative to the comparable period last year.

“This outturn reflected a $35.8 million (7.2 per cent) expansion in spending, which outstripped the modest $12.8 million (2.9 per cent) rise in revenue.”