On Jan 31 the Abaco Chamber of Commerce hosted the Abaco community to a meeting to discuss the upcoming Value Added Tax (VAT). It was held 7:30 pm at the Grace Gym in Marsh Harbour. The meeting was led by Chamber president, Dennis Lightbourne. This particular meeting was one of several that have been, and will be, organized by The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and the Coalition for Responsible Taxation.
The Coalition for Responsible Taxation represents 17 major associations throughout The Bahamas including 700 businesses and 65,000 employees.
Mr. Lightbourne said the purpose of these meeting were to educate the public about VAT and, specifically, highlight alternatives to the Bahamian people. Mr. Lightbourne said, however, that whatever does end up being implemented the Chamber will do all it can to help implement it smoothly.
The Coalition had started meetings with the government before the holiday break.
Mr. Lightbourne began by laying out scenarios for VAT as the Coalition and BCCEC understood them.
VAT will increase the cost of goods and services. VAT implementation will likely create an informal, cash-based economy which will cause the government’s plans for higher collections to backfire.
With increased costs to shipping, both directly with VAT on shipping and indirectly with VAT added to ship maintenance and other service, Value Added Tax will have an added burden for the Family Islands.
One thing Mr. Lightbourne continually pointed out was the lack of transparency. He conceded that VAT may indeed be the right direction for the country to go, however, the sources of all the numbers provided by the government have been shrouded.
The Bahamas does not have a Freedom of Information Act.
Penalties to individuals and businesses with failure to comply with VAT include: fines, shutting down the offending business, prison and seizing the businesses owner’s passport.
Mr. Lightbourne said he believed Bahamians will not be able to “Game the system,” as they have in the past because of the additional teeth included in the VAT bill and the risks involved to the government if it implements the bill and fails.
All businesses will have to purchase new software that is compatible with VAT accounting, or in some other way show and guarantee they are compliant. It is not known yet what this might require.
There is no provision for credit. The VAT bill as it is now requires businesses to pay VAT every month on all invoices, regardless if the business has collected revenue for that invoice yet or not.
Mr. Lightbourne said the Coalition was not just there to complain to the government. They have provided alternatives.
Some ideas that have been floated to the government include:
-Enforcing Budget Caps
-Enforce current taxes including Property, Customs and Business License Taxes that are outstanding
-Enact a Freedom of Information Act
-Enact a 5% Payroll Tax which is easy to collect and brings in $190 million in new revenue immediately
-Tax on business PROFITS which would replace license fees and closes loopholes in the suggested payroll tax
-Tax the Web Shops and Numbers Houses
Mr. Lightbourne reiterated that VAT may indeed be the correct system to implement. But with the short timeframe of implementation (July this year), lack of education on the subject and the closed-doors research and reasoning of the government Mr. Lightbourne said the above highlighted measures would buy enough money and time to fully understand VAT and its impacts on the Bahamian economy.
The Coalition is hiring an independent economist to run different taxation models for the country, including VAT. The government, according to the Coalition, has only run models that include VAT.
Grace Gym was provided to the Chamber for use free of charge.
Neither Abaco representative was present for the meeting.