The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Chamber of Commerce director yesterday urged the Government not to cut the VAT rate to 10 percent and instead implement a corporate income tax.

Debbie Deal, head of the Chamber’s energy and environment division, told Tribune Business it was a “nice thought” for the newly-elected Davis administration to slash VAT to 10 percent but warned it will create more hassle for businesses who will be forced to adjust their pricing and point-of-sale systems.

Ms Deal said: “This is really a challenge, because.....now you have to put all of that in again and change it to 10 percent.” She was responding to the Speech from the Throne, read at yesterday’s opening of Parliament, in which the Government effectively doubled down on its pledge to reduce the VAT rate to 10 percent.

It provided no details, though, on when the VAT rate cut will take effect or for how long. The Progressive Liberal Party (PLP) had said the two percentage-point cut would only be for one year when on the election campaign trail.

Arguing that it is “not going to be a huge benefit to businesses”, Ms Deal added: “If it is only going to be for a year and then they’re going to change that again, which probably won’t be 12 percent and more than likely 15 percent, I don’t know why they just don’t go straight to a corporate tax?

“If they just implemented a corporate tax, they would be able to do leaps and bounds over just lowering the VAT by 2 percent.”

Dwayne Higgs, WHIM Automotive’s general manager, added: “If they feel that reducing their income is somehow going to somehow solve things then I have my doubts about that.”

Voicing scepticism about reducing VAT to 10 percent, he asked: “What will happen after that year? Does it go up to 15 percent?”

“There’s a lot of unanswered questions there. So it would be good to see what their long-term plan is if they were to reduce it to 10 percent for a year. What are they going to do after that?

Acknowledging that the strategy may be to reduce VAT to stimulate spending, Mr Higgs added: “I don’t think, with such a small reduction for the average person by two percentage points on whatever we buy, is not as much as when you combine 2 percent of revenue they’re going to lose for the entire country that they’re going to have to try and make back up somewhere else.”