By NEIL HARTNELL
Tribune Business Editor
Private sector “anxiety” is rising over property tax assessments that have in some cases increased almost five-fold, the Chamber’s chief executive has revealed, coupled with the reduced VAT payment ‘window’ and due Business Licence fees.
Edison Sumner told Tribune Business that the increased costs and processes associated with the tax demands hitting businesses at the start of 2017 were causing some to question whether it was worth staying open.
He added that businesses had visited the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) within the past weeks to say they were “preparing to close their doors”, something it had sought to discourage.
Mr Sumner acknowledged that the Government’s demands for more timely revenue collection to help meet its payroll costs were imposing “more pressure” on already hard-pressed businesses, and pledged that the Chamber would do “whatever” was necessary to ease the burden.
“We have been approached with concerns by some businesspeople regarding the revaluation and reassessments of their properties,” he told Tribune Business.
“It’s just that their properties have been reassessed for what the Government feels is more the correct value. While we agree that everyone should be paying the requisite based on the valuation, many feel they should have had discussions before real property tax renewals are paid.”
Mr Sumner said the Chamber was last week contacted by one business owner complaining that his annual real property tax assessment had increased from $430 to $2,000, a near five-fold rise.
It is unclear whether the property involved was previously assessed as residential, but has now been reclassified because it is being used for commercial purposes - a key objective of the Government’s recently-unveiled compliance and enforcement initiative.
However, Mr Sumner cited the increased referred to as “a hugely significant hike”, and added: “For companies not expecting that kind of outlay, it’s causing a bit of anxiety for them.”
However, he conceded: “I’m advised that the Government valuation process is 30-40 per cent below the market rate had it been done by other means.”
Mr Sumner called for an appeals process to be established for real property tax payers aggrieved by their bills and valuations, and suggested that inspectors visit them to confirm valuations and conclusions.
The private sector traditionally feels the full weight of government taxation during the calendar year’s first quarter, which is when the Public Treasury earns the bulk of its revenues.
Apart from the boost provided by the peak winter tourism season, and associated economic activity, annual real property tax and Business License fee payments are due by March 31, 2017.
And Value-Added Tax (VAT) administration has also become more challenging for the 6,000-plus monthly and quarterly filers, with returns and tax payments now due by the 21st of each month - a one-week reduction of the time they previously enjoyed.
The Chamber chief executive added that while the private sector organisation had not “heard a whole lot” about the reduced VAT filing ‘window’, the feedback received to-date suggested it was causing more “anxiety” for some registrants.
“Reducing the deadline by seven days requires some adjustment, and they’ve lost a week they had before to file returns with the Government,” Mr Sumner told Tribune Business.
“We understand why it’s being done: The Government said they need the revenue in to meet payroll and other financial commitments.”
Mr Sumner’s comments on the Government’s rationale for reducing the VAT filing/payment ‘window’ from 28 to 21 days after the prior month’s end, which takes effect this month, provide further confirmation for suspicions that the Public Treasury is encountering cash flow difficulties.
Receiving VAT revenues a week earlier will enable them to be applied to the Government’s end-of-month wage bill. With ‘personal emoluments’ in the 2016-2017 Budget accounting for $704.295 million, and allowances taking up $46.858 million, the Government faces an average $62.5 million monthly wage bill.
“For the business community it’s created additional challenges, because they’ve lost seven days they had before, when many of them were challenged in meeting the 28th to file returns,” Mr Sumner added.
“It creates more pressure on businesses to get returns in on time, and if that’s not done they’re likely to face penalties.
“If we need to make a recommendation to move back to 28 days, we’ll do that. We have not had an outcry regarding the 21-day filing period.”
The Government has argued that the 21-day VAT filing timeline is still longer than in many other countries, and that all it has done is bring the Bahamas more in line with the rest of the world.
However, the move is likely to further inflame passions in some quarters, amid the outcry over the VAT ‘exemption’ granted for Baha Mar’s construction completion.
Mr Sumner, meanwhile, said the small and medium-sized Bahamian businesses were increasingly sensitive to the increased costs and bureaucracy that were impeding the ‘ease of doing business’.
“The process of getting business done, and the fees they have to pay, are still having an impact on their businesses,” he added.
“We’ve had businesses in the past few weeks come in, saying they’re prepared to close their businesses because of the cost of doing business and onerous processes.
“We naturally do our best to discourage that thought process, and whatever is necessary to reduce the cost and improve the ease of doing business, we’re prepared to do.”
Mr Sumner said the Government, too, based on its discussions with the Chamber was willing “to make sure the private sector is happy” and not feel like it was in business just to generate tax revenue.