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Private Sector ‘Anxiety’ Rising Over Five-Fold Property Tax Increases

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

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.

Comments

John 3 years, 4 months ago

One would really want to know who is really behind the assault on local businesses with increasing taxes, more reporting requirements and disappearing profits. When the tax demands or reporting requirements become too great or too burdensome, more and more businesses will become less compliant or close their doors. And because of the penalties (and interest) associated with it, many businesses that fall behind may never be able to catchh up and so will have no choice but to close. When you see owners of flourishing businesses, like Super Value, complaining it is beyond time for the government to ease up the pressure on local businesses. I think Mr. Roberts concern is not so much on slipping sales as it is with disappearing profits. Since the implementation of VAT and the pressure to pay more property taxes many businesses cannot find a break even point for their operations. Of course whenever their raise their prices, they also increase the amount of VAT they have to pay to the government as well as the business license fees. With less than 6 months left in their term, how can the government explain its declining financial position, its continued pressure on local businesses and it's continuation to give foreign businesses a 'by' on most of the taxes the local businesses are expected to pay. It claimed that the former government left the country in financial shambles. After 4 financial downgrades where are they leaving the country and its people?

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OMG 3 years, 4 months ago

Any value placed upon any property is only relevant on market prices and at the moment selling property for what its worth is difficult. The population is being forced to pay for the black hole of government finances and lavish wasteful spending.

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Economist 3 years, 4 months ago

Mr. Sumner, until the business community takes the government to court, like they do in "First World" countries, the business will continue to be treated like the "third world' wimps they appear to be.

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John 3 years, 4 months ago

Donald Trump is inheriting an economy with 4.7% unemployment. By most economic standards that is considered full employment. Our unemployment is still double digits and can be as high as 15%. While Barak Obama turned the US economy around and restored consumer confidence, he did not release the stranglehold government had on small businesses and allow them to flourish. This government sank the economy deeper into recession and the country into more debt. They made it more difficult and more impossible for local businesses to operate. Donald Trump has promised more tax breaks for small and medium businesses and for businesses that keep or bring their operations in the US. This promise has already stimulated new business and more growth and the US economy continues to strengthen. Our government seems to want to increase their stranglehold on local businesses. There is little or no consumer confidence and persons with money are shopping online or abroad. Many anticipate that if this government wins again a new battery of taxes will be leveled on local businesses and residents. Only necessary becayof corruption and mismanagement of the economy.

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sealice 3 years, 4 months ago

like you can't smell the bullshit on this one = most everyone's property especially the western half of the island got ruined by matthew and all the damaged properties are now worth 5 times the original? More BULLSHIT taxe hikes from the PLP

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totherisingsun 3 years, 4 months ago

Taxation is the opiate of the politicians and public bureaucrats and they are always looking for the next fix. When government jobs are more esteemed than private jobs , a nation is doomed to the inevitable rapid decay of socialism. Free new car, free gas, free perks and tip potential as well...all from the teat of the public cow that can apparently be freely milked to death in short order. When the cow is dead, the next step is to kick it's corpse, spit on it and blame it for not meeting the governments drunken needs. The smart cows will all run away where there milk schedule is not abused but appreciated and where the milk benefits the public and the cow. Who can name a government cow that produced its own milk and gave it to the public?

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