Proclaiming that the "journey of 1,000 miles begins with the first steps", a prominent businessman has urged Bahamians to "stop the negative talk" on value-added tax (VAT) and allow the government to swiftly move ahead with its implementation - a step he views as critical to building investor confidence in this country.
Former parliamentarian and businessman Tennyson Wells told Guardian Business that while there "will be mistakes" and the experience will not be a painless one, it is not until the government moves ahead with tax and fiscal reform that the economy can progress.
"The government should implement VAT. Their fiscal situation is such that until we restore confidence in the ability of government to function and pay its debts and stop increasing the national debt investors will not have the kind of confidence we need to grow the economy.
"On that basis alone we should stop the negative talk and be positive about it. Everyone needs to get behind it and understand that this is what has to be done to restore confidence in the fiscal situation of the government."
Wells, president of the Source River Company Ltd., is a major investor, and is presently leading a bid to establish a theme park in New Providence along with a group of international investors.
He dismissed private sector concerns about VAT's implementation as "a matter of fear" and said that The Bahamas has delayed it for too long.
"People don't like change; they operate out of fear of the unknown, but it has been done and implemented effectively throughout the world and of course we may have to tweak it as time goes on and at the end of the day we'll find the balance. Either that way or by some other tax, payroll or some other tax, we have to do it. Bahamians have to be disciplined. It has to be done by July 1. I see no reasons to put it off.
"They'll make mistakes, and they'll have to tweak it, but the journey of 1,000 miles begins with the first steps. Thats the way to look at it: we must get it behind us, we've been talking about it for 30 years," said Wells.
College forum
Wells made his views known at a College of The Bahamas panel discussion on VAT held on Tuesday evening.
He was one of four presenters at the School of Business' Speakers' Forum at the Harry C. Moore Library and Information Centre.
The others were Robert Myers, president of the Caribbean Group of Companies; Dionisio D'Aguilar,

president of SuperWash, and Rupert Pinder, economist and former adjunct professor at the college.
At that event, Wells said that he sees VAT as a way to spread the tax burden so that wealthy people pay more. His view contradicts those who have argued that VAT is a regressive tax that is unfair on the poorer population, since they pay a higher proportion of their income in tax under a VAT system.
Wells said: "The poor are now carrying the major burden of taxation in this country. People like myself and Mr. D'Aguilar and Mr. Myers - I don't know about Mr. Pinder - really pay very little tax...value-added tax is going to shift some of that burden off the poor to those who are making big money like Mr. Myers, in particular, and most of them don't want to do that," claimed Wells.
"Those of us who could pay, should pay and we should pay more. We do not pay enough and that is a fact."
Wells agreed - like all of the speakers at the forum - that a cap must be placed on government spending.
D'Aguilar, a member of the Coalition for Responsible Taxation, which has been calling for a deliberate analysis of the alternatives for taxation, painted an unfavorable picture of The Bahamas' economy in a post-VAT environment. He also lamented the history of government borrowing that has contributed to the present situation.
"We are not a bunch of dumb people," D'Aguilar said.
"Government is going to get richer, but everybody else is going to get poorer and that is going to have a definite effect on my business and everybody else's business."
He also pointed to existing challenges in the efficiency of tax collection and the need for a more effective tax compliance regime, calling VAT a complex tax.
"I personally believe that there are simpler ways to do it. I personally support a payroll tax. It just seems a lot simpler," he said.
"So as part of this fiscal reform, we have to figure out tax compliance because that is a major, major issue."
D'Aguilar also called for a legislative cap on government spending which limits the debt to GDP ratio to 65 percent.

Crossroads
Rupert Pinder, an economist and former adjunct professor at The College of The Bahamas, told the forum that the Bahamian economy is at a crossroads.
"The problem was not created overnight therefore the solution is not an overnight solution; it's going to take time," he said.
"There has been a lot of discussion with respect to value-added tax. That is only part of the equation; VAT is not a panacea for the problem that we have. Why? VAT is expected to generate a net revenue of $200 million. Best case scenario you have a $500 million problem so it still leaves you with a deficit of $300 [million] that you have to close with respect to that gap."
Admitting that he is becoming a proponent of sales tax, he proposed that tax reform must be administered within the broader context of fiscal reform which strategically addresses expenditure improvements and tax collection efficiencies.
Pinder also drew a parallel between the current system of taxation in The Bahamas and VAT, arguing that the latter is not radically different from the status quo.
Co-chair of the Coalition for Responsible Taxation, Robert Myers, clarified that the Coalition is not anti-VAT but is merely calling for an examination of the details and facts and a responsible analysis.

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