The co-chair of the Coalition for Responsible Taxation has hit back at suggestions made by a leading accountant that any business that struggles under value-under tax (VAT) may simply need a better business model, calling the claim made by accountant John Bain "a bit harsh".Meanwhile, the coalition co-chair, Gowon Bowe, pointed out that while one of the advantages of VAT highlighted by Bain is that it is "the least costly tax for a government to collect, as businesses do virtually all the work" it still requires significant upfront costs to implement and the concern is that to the extent these are borne by the private sector it will cause reduced investment in other areas.In a lengthy article (published on page two of this section) chartered accountant and the managing partner at UHY, Bain and Associates, John Bain, calls VAT "by far the most attractive" tax option, and suggests that the "cries of doom and gloom and the destruction of The Bahamas from VAT's implementation are not supported by facts". Bain states that the government must not delay the implementation of VAT, which he calls "20 years too late".Bain said that it is not fair to say that Bahamians "cannot manage anything", including VAT, and suggested that VAT's attractiveness stems partly from the fact that "for a normal taxable business" VAT should "wash through the accounts, be collected from the customers and paid over to the Central Revenue Agency".He adds that the public will eventually "largely forget they are paying tax" despite an initial inflationary impact.While admitting that cash flow issues could arise from the "slight delay" in reclaiming VAT refunds, Bain stated that these can be "taken into consideration by the management of the business at the planning stage". Bain suggested that businesses must begin to prepare for the upcoming implementation of VAT.Stating that first and foremost he hopes that everyone should be "respectful of one another's competencies" in the VAT debate, Bowe said in response to Bain that it must be remembered that while a criticism of VAT "doom and gloom" naysayers is that their feedback is "based on sentiment and not empirical evidence, a lot of what government has done to this point has been based on sentiment"."All people with that knowledge and background should be saying, 'Let me see the facts and draw the conclusions'. It's simply a case of asking for enough information so that we can all be comfortable that it is the right tax," he said.The Coalition for Responsible Taxation, which represents hundreds of businesses, has argued that the government has not yet proved the case that VAT is the best new taxation option for The Bahamas, and has called for more research, some of which it is doing itself.On the question of VAT's impact on cash flow given the refund system, Bowe said that Bain "as an accountant can well appreciate that you can manager your customers, your suppliers, but managing the government is a very difficult task because you can't rightfully or with any degree of success penalize the government for not carrying out its tasks in a timely manner".While the government requires business to remit VAT within 21 days of the end of the month, businesses must wait until 90 days after that period to apply for any refunds for VAT they may have overpaid and then wait to receive that refund."So when you put it into practical terms you are holding on to a receivable for 120 days that's not monetizable, and that may cause you to lead to other problems where you are not able to pay your bills. It's not a collection issue it's a timing of collection issue," said Bowe.Meanwhile, Bowe defended businesses against the claim that should they struggle under VAT their business model may not have been up to par."You've got to be careful to say 'the implementation of a single tax'. By and large this is a complete change to how the businesses will operate. Even in other Caribbean countries where they already had taxation system the greatest effort was made to make sure businesses were in agreement with the implementation because it is something that is very onerous on business upfront," he said."It's not a knock on their business model its a change in the way they are operating that takes time to become familiar with and to implement it effectively, and that has to be taken into consideration by authorities."Small and medium-sized enterprises are the drivers and engine of the economy; big business can more easily adapt to change, but those small and medium-sized enterprises that allow further economic trickle-down effect have to be considered."Most critically, Bowe said it must be taken note of that Bahamian businesses have had to adjust to many changes throughout their existence but VAT is the only one which has elicited such a "significant cry of worry"."It behooves all in authority to listen to it; they should be respected and all efforts taken to allay their fears," he said.

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