Marco City MP Greg Moss has accused the Christie administration of using the looming value-added tax (VAT) on professional services as a means of "subsidizing" the government's revenue stream.
Moss told Guardian Business that the anticipated impact of the 7.5 percent VAT on legal services is "very troubling" for the legal community and will inflate cost of services.
"The fact that professionals will be required to pay VAT as they render invoices, even before they collect VAT on those invoices, makes it very clear that one aspect of VAT is to cause the professionals in this country to subsidize the government's revenue stream in the hope and anticipation that they will actually get that money back without any assurance that they will. That's very troubling. That's obviously going to have a significant impact on the rendering of professional advice to people in the community. [VAT] clearly will inflate the cost of services," he said.
Moss spoke during a VAT educational seminar hosted by the Bahamas Bar Association (BBA).
Although the seminar provided some clarity regarding the VAT-exempt status of pro bono legal services and retainer fees, many local attorneys were left with unanswered questions and confusion over the tax's reach.
"The most telling outcome of this conference today is that, even at a professional level, with attorneys and accountants, we're seeing significant areas of concern with the implementation of VAT," said Moss.
Moss notably voted against the VAT Bill in August due to concerns over its widespread effects on the economy. He was the only PLP MP to do so.
Aside from the tax's impact on costs, Moss and several attorneys had additional concerns over VAT's ramifications on client confidentiality. BBA members claimed that the tax's current filing system would require legal professionals to reveal confidential material on their invoices.
"The details that we are going to have to put in our reporting concerning the work that we've done for our clients [breaches] our duty of confidentiality with respect to our clients," said Moss.
Although Moss urged the government to revisit this aspect of VAT reporting, he suggested that there is "no mindset" to do so in the near future.
"I think VAT is not only a bad idea, but will be disastrous in its implementation, and I suspect that the idea of revisiting it will become an election issue," he said.
Businesses and professional service providers, including attorneys, accountants and doctors, with annual turnovers above $100,000 must register for the tax by November 30.
With less than two weeks until the registration deadline, it has become increasingly questionable whether the government will be able to register the growing number of mandatory registrants by that date.
"We know, based on recent statements that have been made, that only about 7.5 percent of those who are expected to register for VAT have registered. That says a lot about maybe the apathy but certainly the confusion that the public have about VAT. Unless we're going to take some very draconian steps of implementing these extreme, excessive fines that we've legislated, clearly there's going to be a more extended period that's needed to allow the transition to VAT. I'm hopeful that we're realistic when we do that," said Moss.

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