Retailers across the country accused the government yesterday of "setting itself up for failure" and leaving The Bahamas in a "precarious and dangerous" position by implementing value-added tax (VAT) without also moving ahead with greater duty reductions and other demanded reforms.
Suggesting that VAT "could have been a great reform" for the country, the Bahamas Federation of Retailers (BFR) expressed concern that it has been "rushed" into law without due consideration, consultation or accompanying reforms in the area of access to information, energy
cost reductions and wider fiscal adjustments.
In its first official statement since the release of update VAT legislation and the passage of the law, the BFR maintained that the government has to date "failed to address" the business community's "real and significant concerns about the tax".
"Laws that are poorly planned, poorly debated and poorly implemented do not serve the interests of The Bahamas or the Bahamian people. Due diligence was not completed here," said the industry grouping.
The group said it was supposed to meet with Minister of State for Finance Michael Halkitis prior to the passage of VAT but this never took place. It claimed that consultation which occurred was not genuine, given the belated release of the final draft of the law and accompanying regulations and tariff amendments.
"Despite claims to the contrary, the government dragged its feet in releasing the revised legislation and tariffs and then failed to allow sufficient time for the business community to offer feedback. Without the details of the legislation, there was no way to form an informed opinion," it added. The government has argued that it passed the legislation having engaged in extensive industry consultation, and made amendments based on recommendations and feedback.
While in other countries, VAT has been implemented along with a reduction or elimination of other existing taxes, this is not the case in The Bahamas, based on the government's current plan, the BFR stated.
"The BFR has repeatedly stressed that VAT will only be successful if substantial reductions in duty are concurrently implemented. The BFR also highlighted that price inflation due to VAT must be avoided at all costs in these difficult economic times, with duty reductions a means of reducing that risk. The government has not committed to a timely and significant reduction in duty, leaving the future of our economy more uncertain than ever and our people facing a remarkably regressive tax with no relief in sight. Everywhere else, VAT has simplified the tax code by eliminating or replacing existing taxes. That is not happening in The Bahamas. It is being added as another layer upon existing taxes," it added.
The federation expressed concern about the speed with which VAT was debated and passed in the House of Assembly last week and the absence of the prime minister from the crucial vote.
"(The BFR) is stunned that the government passed VAT with so little deliberation in the House and without getting more feedback from the business community on the nuts and bolts of the tax's practical administration," the group said in a statement.
Prime Minister Perry Christie left the VAT debate early, prior to the vote, in order to travel to Las Vegas, Nev., for the opening of a hotel there by SLS Hotels, the company which is set to open a hotel as part of the Baha Mar resort.
The BFR accused the government of "rush(ing) ahead" with tax reform only, despite calls from the BFR and the Coalition for Responsible Taxation, of which it is a member, to engage in a comprehensive overhaul that would join tax reform with fiscal and energy reform and the implementation of a Freedom of Information Act.
"A rushed and dysfunctional approach to tax reform serves no one's interests: not the government's, the treasury's, the business community's and certainly not the interests of Bahamian citizens and residents," it stated.
The grouping urged Bahamians to sign the Coalition for Responsible Taxation's petition on Facebook at Wake Up Bahamas and to call or email their MPs and let them know how they feel about VAT.
"This is your and our country and every Bahamian can make a difference by speaking up and getting involved," it added.
"VAT could have been a great reform for The Bahamas - and it still can be with the proper due diligence and consideration. Forcing a tax on people rarely works. We hope that our elected officials will start to listen more in the coming weeks and months as the people who put them in office make their voices heard."

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