Telecoms 'ripe' for increased taxation says former Chamber of Commerce president Dionisio D'Aguilar

Telecoms 'ripe' for more taxes
By NEIL HARTNELL
Tribune Business Editor:


Telecommunications is an industry "ripe" for increased taxation, a former Chamber of Commerce president yesterday urging the Government to "come up with innovative ways" to raise revenue by increasing fees on industries that paid "negligible taxes", such as banks/trust companies and the numbers business.

Suggesting that the Government impose a 1-2 per cent tax on making/receiving telephone calls, which is effectively a Bahamian national pasttime, Dionisio D'Aguilar said that if the Ingraham administration sought to raise revenues in its 2010-2011 Budget, it needed to look at fee increases that had the "least effect on the average person in the street".

Urging the Government to "come up with innovative ways to raise additional revenues", Mr D'Aguilar, who is also Superwash's president, told Tribune Business: "There are sectors of our economy that pay negligible taxes. Telecoms, that's a ripe one. Everyone pays a tax on their incoming calls. That's a totally undertaxed sector."

Mr D'Aguilar said such telecoms taxes were already levied in many other countries, and said a 1-2 per cent tax on telephone calls was "negligible to the consumer", especially since many Bahamians treated their cellular phones as a luxury.

Adding that he disagreed with fellow businessman Franklyn Wilson, who yesterday told Tribune Business that legalising gaming would result in net outflows from the Public Treasury, as a result of "gambling breeding poverty" and other adverse social consequences, Mr D'Aguilar said taxing the numbers business would raise millions of dollars per year in government revenue.

"Banks tend to be under-taxed compared to other businesses," he added. "It's a heavily under-taxed industry" compared to the income that Bahamian banks and trust companies generated per annum.

Mr D'Aguilar also pointed out that the Government was "not taxing services one bit", even though this was the sector accounting for the largest amount of economic activity in the Bahamas. He suggested, though, that the Ingraham administration was unlikely to do anything about this in the 2010-2011 Budget, and was likely to save it for a more comprehensive introduction of Value Added Tax (VAT).

"All you're looking at are fees, raising revenues from avenues that have the least effect on the average person in the street," Mr D'Aguilar said of the Government's efforts to plug the fiscal deficit and reduce the national debt.

"Look at the whole fee structure. There's a whole host of fees that are charged, but have not been amended, for four million years.

"They have to look at taxes that are easy to collect. Gasoline taxes are easy to collect because they are paid at the border when the fuel comes in. But property taxes are a nightmare to collect. Increasing property taxes could increase revenue, but not the Government's cash flow. And that's what we need to increase.

"The Government will not be able to get increased taxes from its traditional sources. Import duties are already high enough."

While all Bahamian governments were reluctant to cut spending and reduce the size of government, the former Chamber president suggested that the Ingraham administration now had to seize the moment offered by a public mood that was more prepared for austerity measures, and set the public finances back on track.

Arguing that the Government would find it impossible to accommodate the wishes of the likes of the Nassau Institute, which would like to see departments closed down and employees released, Mr D'Aguilar suggested that the administration "tackle" the generous pensions and benefits civil servants/public sector employees enjoyed.

Emphasising that this did not involve changes to basic salaries, the former Chamber president said: "They've got to get their house back in order. We don't want to go the way of the Greeks.

"The Government needs to look at the generous benefits it gives its employees. Salaries are one thing, but those generous and lucrative defined benefit pension plans for public sector workers and civil servants have to be tackled. That whole issue has to be tackled, as it will come home to roost one day."

May 07, 2010

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