Tuesday, July 2, 2013

More details on the legislation and regulations to support the government's proposed value added tax (VAT) system is forthcoming

Govt to reveal more on VAT

By Taneka Thompson
Guardian Senior Reporter

Minister of State for Finance Michael Halkitis said the government intends to reveal more details on the legislation and regulations to support its proposed value added tax (VAT) system as early as the next three to four weeks.

The system is scheduled to take effect on July 1, 2014.

Halkitis told The Nassau Guardian that the government wants to be able to provide members of the public with the proposed legislation as well as the relevant regulations on the new tax system so they can be discussed at the same time, well in advance of the enforcement date.

“We will give the public a good idea of the items that will be exempt and the registration threshold so the public can have a better understanding of its potential impact on them,” Halkitis said.

“When we present the actual legislation for public discussion then we will accelerate our public education, which involves moving throughout the country and informing the people of its potential impact on them, etc.

“You can expect to see towards the end of the summer and into the fall an intensive public education program because we realize that is very important.”

While there have been some fears that VAT may add to the financial burden of the lower class, Halkitis said he expects the new system to bring in more money from wealthier individuals.

“Right now we virtually do not tax the services portion of our economy and we know that individuals with higher incomes spend a greater portion of their income on services,” he said.

“We are fully aware that particularly those at the bottom end of the economic bracket can ill afford any increase in the cost of living and we’ll do all we can to mitigate against that.

“We are also aware that nobody likes to pay taxes and we can’t afford to overtax the economy and drive us back into a recession, so we are trying to balance the need for revenue against making sure we don’t overtax the economy, and of course we have to look at the hole in the budget that we have to fill so we get lower deficits, lower amounts to alter the public debt.”

Halkitis said the VAT system will have built-in protections to offset overtaxing.

He said basic food items, medicine, education, health care and financial services are categories that will likely be exempt from the tax.

He also said that once VAT is implemented the government will reduce certain customs duty rates.

“So we will take all measures to ensure that it does not fall disproportionately on those who can least afford it,” Halkitis said.

The government intends to impose a 15 percent VAT on most goods and services, except for those that fall under the exempt category.

July 01, 2013