As the government moves full speed ahead with its intention to implement value-added tax (VAT), a leading hotelier said he would have preferred a sales tax and is urging the government to delay the implementation date for VAT.
In an interview with Guardian Business, Atlantis President and Managing Director George Markantonis said for the Paradise Island property, implementing a sales tax would be "easier" than implementing VAT. He made this suggestion as uncertainty still looms about the latter form of taxation.
"We all understand it and the whole world has done it (sales tax). And more importantly for us, our computer systems would be able to take those changes," he said.
While the government has proposed a general VAT rate of 15 percent, the hotel sector will be subject to a lower rate of 10 percent. Markantonis has estimated that his company will have to spend at least $500,000 on technology to implement VAT.
Markantonis is not the only one suggesting that a sales tax be implemented instead of VAT.
Numerous members of the business community, such as President of the Bahamas Motor Dealers Association Fred Albury, and Super Value President Rupert Roberts, have also touted such an alternative as a simpler alternative to VAT.
Meanwhile, Pedro Delaney, a chartered accountant and chief financial officer at Societe Generale Private Banking (Bahamas) Ltd. and SG Hambros Bank and Trust (Bahamas) Ltd., recently said the government should consider other forms of taxation such as a corporate income tax, which he believes would be easier to implement.
"When you consider income taxes, there are personal income taxes as well as corporate income taxes. Corporate taxes may be an easier measure to implement if we are going to address income taxes. The government may in considering that want to consider a flat rate for corporations on their net income," he noted.
The government, however, has pointed to the more "regressive" nature of a sales tax, which does not allow for credits for tax paid on inputs, and therefore becomes "a tax on a tax". Officials have also suggested the credit mechanism under VAT would increase compliance with the tax regime.
Atlantis' top executive is urging the government to postpone the July 2014 implementation to allow for more preparation time. In the meantime, Markantonis confirmed that Atlantis plans to hire consultants to help it understand the ins and outs of VAT and the impact it could have. He maintains that his biggest concern is the possibility of The Bahamas outpricing itself as a destination.
"We're not sure how it's going to impact us spread across our campus because we have multiple business units and revenue streams. They're not all what it would be in a typical hotel. Is Marina Village, which has four of our restaurants, part of the hotel or not? How do the dolphins fall into this picture? There are a lot of factors you have to look at," he told Guardian Business.
"We're not going to eat the costs, that's for sure. So the issue is going to be if there is going to be an added cost, and if we're not going to be reimbursed for it in another manner, which is trackable, that's the key, then obviously we are going to have to pass that on to the consumer. Do we like it? Well, no. I hope it doesn't get to that because we certainly don't want to outprice our destination because we are already fairly pricey."
Officials at the Ministry of Finance estimate that VAT can generate approximately $200 million in revenue in the first year alone, which the government has suggested is key to reducing national debt levels.

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