By NEIL HARTNELL
Tribune Business Editor
The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) yesterday said it was preparing recommendations for “across the board” changes to the Business Licence fee regime, which will “benefit” both the Government and private sector.
Edison Sumner, the Chamber’s chief executive, said Business Licence fees should strike a balance between raising revenues and not becoming “too onerous” for Bahamian businesses.
Pointing out that “if the private sector fails, the Government fails”, Mr Sumner suggested that there was room for a “trade off” given the amount of revenue that the business community was producing for the Public Treasury through Value-Added Tax (VAT) and other levies.
With the Chamber still awaiting a formal response to its call for the Business Licence turnover certification threshold to be raised from $100,000 to $400,000, Mr Sumner disclosed: “The other thing we’re making recommendations on to the Government is the Business Licence fee structure itself.
“We want to analyse that, review that, and make adjustments to the fee structure period; across the board.”
Mr Sumner declined to divulge specifics on what the Chamber will likely recommend, as these are still being discussed internally.
However, he added: “The fact we’re raising revenue for the Government through VAT, Business Licence fees, real property tax and import duties, we’re looking forward to there being some trade-off.
“The Government doesn’t lose revenue, but it’s not limiting in a way that businesses find it difficult to maintain their business because of onerous fees.
“We want to sit with the Government, and think they’re open to these discussions. We want to make informed submissions to them on how the Business Licence regime can be restructured so that businesses and the Government benefit from this.”
The private sector recently hailed the International Monetary Fund’s (IMF) call to simplify “non-business” friendly taxes as a direct reference to the Business Licence fee.
Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said the Business Licence fee system taxes companies into losses.
He told Tribune Business earlier this week: “The Business Licence regime currently charges on revenues and does not factor in the profitability of businesses.
“In practical terms, a business can be profitable before Business Licence fees and be driven in to losses once Business Licence is factored in.
“There is no progressive tax regime globally that taxes a business into losses. Taxes are capped at profits and, under corporate tax regimes, losses can in fact be carried forward for a period of time. This reality has been recognised by the IMF team, and our policymakers must work with the private sector to reform this tax.”
The Business Licence fee, and how it is calculated, have been concerns for the private sector long before the latest controversy erupted over the Government’s decision to move the annual filing deadline forward by two months to end-January 31.
The Christie administration eventually relented, and move it back to end-March, but businesses have long regarded the use of turnover/revenues as the basis for calculating Business Licence fees as unfair.
The use of turnover, rather than profits, penalises high volume (revenue)/low margin businesses, such as food stores and gas stations. They inevitably incur higher Business Licence fees than low turnover/high margin (profit) businesses such as law and accounting firms.
Many companies have also complained that their annual Business Licence fees are higher than their net profits, meaning that the Government is earning more from them than their shareholders are.
Mr Sumner yesterday said that if the private sector “fails at any level, so does the Government system, because the Government depends almost entirely on the private sector to raise its revenues.
“If the private sector fails. civil society fails, the Government fails. It’s important the Government listens to the private sector when these recommendations are made.
“We will never make any suggestions to the Government that we feel will be detrimental to the economy and the country. If the Chamber makes a recommendation to the Government on any issue, that recommendation is being made to improve the current situation.”
Mr Sumner acknowledged that the Inland Revenue was currently dealing with a “unique”, once-a-year situation in that it was receiving Business Licence filings/payments at the same time as monthly/quarterly submissions by VAT registrants.
“They have to demonstrate that they’ve got all the resources, and that the technology is robust enough to handle this volume coming through the system,” he added.
Mr Sumner said the Chamber did not plan to ask the Government for any further Business Licence filing deadline extensions, having obtained one already.
“We don’t want to do it again, and don’t see any reason for it,” he added.
The deadline to submit annual Business Licence filings and payments is today.