Vat Rate Rise 'Criminal' If No Compliance
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A former Bahamas Chamber of Commerce president yesterday it was “criminal” for the Government to already be talking about increasing the 7.5 per cent Value-Added Tax (VAT) rate prior to getting the existing tax system’s compliance levels to 80 per cent.
Dionisio
D’Aguilar described suggestions by John Rolle, the Ministry of
Finance’s financial secretary, that the VAT rate would likely increase
in “the not too distant future” as “premature”.
“It’s
too early for them to say what’s going to happen or not,” he told
Tribune Business. “They don’t know how much revenue it’s going to yield.
It’s premature of him to say that.
“The
Government has a lot of legwork to do to improve revenue collection and
the enforcement of collection. It would be criminal for them to talk
about increasing the rate before they’ve raised the compliance
threshold. They should get it to 80 per cent before they raise the
rate.”
Mr
D’Aguilar added: “If we were to collect everything we were supposed to
collect, we would not need the VAT, and it wouldn’t just be honest
people paying the Government.
“The
Government has to think about how they’re going to enforce compliance.
They can’t keep increasing taxes or introducing new ones unless they
collect the ones on the table.
“You
talk to politicians about how to do it, and they skirt the issue all
the time. They just don’t want to take tough decisions to implement
collections. Talk to Perry Christie and John Rolle, and they have no
answers.”
Given
the problems the Government already has in collecting all the Business
Licence fees, real property taxes and border taxes due to it, Mr
D’Aguilar questioned how it would cope with VAT.
“People
don’t pay unless you get vicious,” Mr D’Aguilar told Tribune Business.
“Unless you crush that rock, I don’t think you can talk about increasing
the VAT rate.”
Robert
Myers, the Coalition for Responsible Taxation’s co-chair, yesterday
told Tribune Business that fiscal reform had to “hold everyone’s feet to
the fire”.
“Already
the consumer’s feet are being held to the fire because we’re all going
to be paying more in tax,” Mr Myers said, referring to the increased
cost of living/reduced living standards that VAT will bring.
“Our
position is that it cannot happen without government’s feet being held
to the fire,” he added. “They need to be accountable for compliance and
working towards a balanced Budget, and accountable for expenditure.
“That
means expenditure control, as we’ve been living beyond our means.
They’ve [the Government] been doing that almost year-over-year for the
last 30 years.
“That’s
where we’ve been very adamant that it’s got to be tough love. We don’t
mind paying, but you in government have to be accountable, and have some
control.”
Mr
Myers agreed that much uncertainty surrounded the 2014-2015 Budget
because its content was determined in the last 72 hours prior to the
Prime Minister’s address.
“I
think a lot of it has kind of been a bit unsure because the timing was
not great,” he said. “We’re all guilty on that standpoint, but it
couldn’t be helped. We moved as fast as we could.”
June 04, 2014
