Confirming that the $83 million Nassau Container Port (NCP) expects to add 15 percent to all shipping-related services it provides once value-added tax (VAT) is implemented, the port's CEO said the facility could also see a spike in expenses if the proposed new tax regime comes into effect.
While he has no issues with the government's plans to reform the country's taxation system, Arawak Port Development (APD) Limited's CEO Michael Maura Jr. said he is concerned that the government must take steps to be as efficient as possible in its operations, as well as about exactly how the tax will impact his bottom line, given the lack of confirmed details released to date.
"The government needs to be looking within and making sure that it's right-sized against where we are. And that you when you take a downturn, you've got to right-size and when you take an upturn, you have to right-size," he told Guardian Business.
"But we all have to become as efficient as possible and that includes government. My concern is efficiency. It's one thing to come up with a tax, and again I appreciate the fact that we need to get more money out of the economy to pay our bills, and I support that, but we have a huge issue with our debt. We need to pay our bills.
"We have services that we expect to have the government provide everyday. I expect to pay more as an individual. I just want to make sure that I understand how it's all going to work so that I can add it all together."
While it's no secret that every sector in society will be impacted by VAT, Maura explained the impact he expects VAT to have on operations at the Nassau Container Port (NCP) based on what he knows.
"We are a service provider so wherever we have a charge, we would be expected to assess that VAT percentage. At the moment, it's being explained as 15 percent. So for example, we charge $40 to take a 20-foot container off the ship, so we would have to apply 15 percent to that $40. So that's how we pass it on," he said.
"Now from a payment perspective, we also consume a lot of services. So we are going to be incurring 15 percent on those services that we incur.
"So what we will then do is look for a credit on our payments against the outgoing monies to government, but we will be impacted like any business. The shipping companies will be impacted. Basically everyone in the process will be impacted."
As the debate intensifies on the subject, some have questioned the Family Islands' preparedness in time for the proposed July 1, 2014 implementation date.
Bahamas Hotel Tourism Association President Stuart Bowe said the organization is particularly concerned with the readiness of the Family Islands and small business, which are above the anticipated $100,000 per annum sales threshold, due to limited resources and access to affordable expertise. And Co-Chair of the Bahamas Chamber of Commerce Employers Confederation's (BCCEC) Coalition for Responsible Taxation Robert Myers believes inflation could reach "unbearable" levels in the Family Islands under VAT.
Doing its part to foster Family Island development, the NCP announced its Family Island Development Initiative last week, which is filled with incentives that seek to foster sustainability of small Bahamian shipping companies.
These incentives include a 50 percent discount on landing fees on domestic cargo landed at NCP, a 50 percent discount off landing fees on "duty not paid" cargo landed at NCP when a Family Island is to be the final destination, 25 percent off landing fees for "duty not paid" cargo earmarked for New Providence and shipped by 100 percent Bahamian-owned and operated vessels only, and 14 days of free storage on "duty not paid" cargo headed to the Family Islands.
Maura called these "monetary motivations" an integral component of NCP's initiatives that should not only strengthen 100 percent Bahamian-owned enterprises, but contribute too to a growth in Family Island commerce.
Upcoming VAT informational events
The Value-Added Tax (VAT) Implementation Unit of the Ministry of Finance has announced upcoming informational sessions, speeches, presentations and appearances on the VAT's Implementation and VAT "business readiness" as a part of the public education exercises during the week of November 18-23, 2013.
On Monday, November 18, 2013, members of the VAT Implementation Unit will deliver a presentation to the Yamacraw Constituency Association at its monthly constituency meeting at the Thelma Gibson Primary School, starting at 7:00 p.m. until 9:30 p.m. All interested persons in the Yamacraw constituency are urged by the ministry to attend.
On Tuesday, November 19, 2013, members of the Ministry of Finance along with officials from the VAT Implementation Unit will give speeches and brief presentations on the state of the economy and the urgent need for tax reform at the Bahamas Financial Services Board's Speech Competition Finals being held at Sheraton Nassau Beach Hotel, starting at 10 a.m.
On November 19, 2013, Ministry of Finance officials along with officials from the VAT Implementation Unit will be giving a presentation at the Oakes Field Primary School Parents/Teachers Association, from 6:30 p.m. to 7:30 p.m.
On November 21, 2013 members from the VAT Implementation Unit will be delivering a presentation to the Seabreeze Constituency Association at the Sadie Curtis Primary School from 7 p.m. to 9:30 p.m. All interested persons in the Seabreeze constituency are urged to attend.
oFor more information, you can contact the VAT Implementation Unit: vat@bahamas.gov.bs, (242) 327-1530 (Ministry of Finance) or (242) 225-7280 (VAT Hotline).
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