Bahamas Opposition says no to VAT
Bahamas Opposition says no to VAT
The Bahamas main opposition Free National Movement (FNM) is questioning the government's ability to introduce the 15 per cent Value Added Tax (VAT) system there from today, January 1.
FNM deputy leader and shadow finance minister Peter Turnquest said the general public is also questioning the government's ability "to effectively manage this significant and important change to the country's tax structure.
"While the government will force the initiation of this increase in Bahamians cost of living, it is doing so without due consideration to the circumstances of ordinary Bahamian families who are currently suffering from a continued slow economic recovery, where jobs are scarce despite the failed promise of 10,000 new jobs," Turnquest said.
He said in addition, "mortgage arrears continue to rise as many families lose their homes, their most significant lifetime investment.
"To date, there has been no announcement of any plans for Social Services to address the specific impact that VAT will place on the poor in our country," he said, adding that the education process and promulgation of VAT Rules has been "late, underfunded, and sloppy leaving many questions unanswered".
Turnquest said that on the eve of the tax, a VAT Comptroller has still not been appointed forcing the Financial Secretary to do double duty as "Acting VAT Comptroller" for an undefined period.
"This is unacceptable as the Financial Secretary ... is inherently in conflict with his duty and responsibility to the Ministry and Ministers' of Finance," he said, noting also that the VAT Court has not been announced as required by the legislation.
"Revelations over the past two years in respect to Real Property Tax arrears gives us a good indication of what will happen if the government fails to set in place the proper enforcement mechanisms before the commencement date.
"If the government lacks the political will to ensure the law will be enforced and the institutions are in place to execute, I fear we will find ourselves in a similar state, with the elite being exempt from handing over government taxes while average consumers and law abiding business carry the brunt of the cost as usual."
In a statement the authorities said that the VAT would go into effect on Thursday and "in an effort to encourage voluntary compliance and foster good working relationships with the business community and taxpaying public, the VAT Department will conduct compliance field visits to ensure that businesses are ready to operate within the new VAT environment".
The VAT Department said that the focus will be to ensure that businesses display their registration certificates in a prominent location and issue proper VAT invoices and receipts".
It said that online registration was launched on October 13 and that all businesses meeting taxable sales of US$100,000 should have completed registration by November 30.
"Businesses are encouraged to operate within the ambit of the VAT Act 2014," the Department added.
But another opposition party - the Democratic National Alliance (DNA) - said that "struggling families must now brace themselves for additional cost of living increases and business owners who had been planning expansions and new hires have opted to shelve those plans as they wait to see what effect the new regime will have on the economy.
"In just days, the new tax regime threatens to completely and indefinitely alter the economic landscape of the country, and not for the better. Even worse, in the lead up to the launch of the new tax laws, the government bungled the campaign which had been expected to prepare the public for the widespread changes," said DNA leader Branville McCartney.
"Instead, the government has consistently bullied the business community into co-signing this venture, threatening them with heavy fines and jail time for non-compliance; this, even as government officials continue to lead the pack for failure to pay their own taxes."
McCartney said that the January 1 implementation date will also take effect without the existence of a Freedom of Information Act which he said was "one of several recommendations made by the government's own VAT consultants who highlighted the need for such laws to exist in a VAT environment specifically as a means of making the process as transparent as possible.
"Like countless other pressing national issues, an overhaul of the country's tax system is an idea whose time has come. Unfortunately, the government's handling of the initiative has proven that without proper planning, consultation and the advancement of a focused and widespread education campaign, such a strategy could have catastrophic consequences for our already struggling economy," he added.
McCartney said that VAT "is bad for business and certainly bad for the Bahamas".