Monday, March 3, 2014

The proposed Value Added Tax (VAT) could deteriorate The Bahamas’ economy

Moree Says Gov’t Should Consider Payroll Tax–Attorney says VAT could destroy economy

by Korvell Pyfrom
Jones Bahamas:

A payroll tax would be a better solution for the country at this point, suggested Attorney and former Chairman of the Public Service Commission (PSC) Brian Moree, Queen’s Counsel, who warned that the proposed Value Added Tax (VAT) could deteriorate the country’s economy.

Mr. Moree, who appeared on Jones and Company Sunday, said VAT will affect the cost of living in The Bahamas significantly.

“Depending on your view of VAT, it is not going to grow the economy,” he said. “It is going to cause significant deterioration of the economy because even the proponents of VAT and the policy makers will tell you that is going to create what they euphemistically call a one-time cost of living adjustment – they say of about nine per cent – some people say it could be as high as 12 per cent and some people say it may be as low as seven per cent. But what is common ground is that is going to have an immediate impact of an increase in the cost of living somewhere between seven per cent and 12 per cent.”

Mr. Moree acknowledged that the government needs to raise revenue, reduce its deficits, grow the economy and reform the tax structure, but he said VAT is not its only option to pursue these things.

He suggested that the government consider capital gains tax, sales, tax, income tax, but he said a payroll tax seems to be the best alternative.

“It’s just a question of deciding what will have the most negative effect on the economy at this time and what could reasonably be implemented in the economy of The Bahamas where we have no culture of paying taxes in terms of record-keeping, reporting, enforcement and compliance,” he said. “Many business people today are really concerned whether they are going to be capable of keeping the books and records that are going to be necessary in order for them to administer VAT.”

The government intends to implement VAT at rate of 15 per cent on July 1, 2014.

Many business leaders have raised concern about its implementation with Super Value food stores President Rupert Roberts warning that it could lead to a customer revolt.

Financial Services Minister Ryan Pinder recently suggested that regularising the gaming industry could delay VAT’s implementation and reduce the rate at which Bahamians will be taxed.

March 03, 2014

The Bahama Journal