THE TRIBUNE
Tuesday, June 12, 2018, PAGE 3
Gibson seeks delay in VAT rise By RASHAD ROLLE Tribune Staff Reporter rrolle@tribunemedia.net
THOUGH he supports the tax hike, Long Island MP Adrian Gibson said he wants the government to postpone the increase of value added tax. Speaking in the House of Assembly yesterday, the Water & Sewerage Corporation chairman said: “While I support the increase in VAT and the simultaneous reduction and eventual elimination on customs duties on various imports, I’m concerned there wasn’t a greater degree of public consultation and/or consultation with big business and/or the business community. Given the concerns being expressed, the increase perhaps should be postponed until the third or fourth quarter as opposed to immediate implementation on the 1st of July. In my constituency, I’ve faced many questions. This would
allow business houses to organise their accounts and their affairs. I spoke to Long Island business persons and even chatted with (Super Value owner) Rupert Roberts this morning and I can tell you they feel a brief postponement would be more palatable.” Nonetheless, Mr Gibson said the tax increase is necessary. “There is no such thing as a free lunch as we seek better infrastructure that would translate into new opportunities for The Bahamas,” he said. “To obtain the same we must understand that either the government must raise the funds through taxation or borrow. We cannot have our cake and eat it too. It is a give and take. Our people must appreciate that our need to increase VAT from 7.5 percent to 12 percent, particularly given our accession to the World Trade Organisation, is necessary. One, the country needs
supplemental taxation to reduce legacy debt that has astronomically impacted the debt to GDP ratio, and customs duties will in large part be eliminated or greatly reduced when we are slated to join WTO. Our country can no longer survive on credit. Moving forward I would suggest we also implement a debt ceiling.” As for increased taxation of web shops, another controversial budget item, Mr Gibson said communities in Long Island have been negatively impacted by the industry. “The expansion and proliferation of web shops throughout The Bahamas has caused concern,” he said. “Frankly, on islands such as Long Island where we have 15 to 20 web shops, local communities have been negatively impacted in many cases. Frankly, I think that web shops taxes should be even higher. When contrasted to the UK and elsewhere, these operations
are being taxed on the lower end. Greater regularisation is needed in the local gaming industry. What’s more, I do not yet know of mechanisms in place to assist persons who develop gambling addictions. Have the gaming houses established such centres?” Mr Gibson called on the government to raise tariffs at WSC, noting the tariff there has not been raised since 1999. “There is a noticeable cut in the budget allocation for Water & Sewerage,” he said. “While that means that operation and collection efficiency must improve to keep the corporation solvent and while I welcome the government’s attempt to lessen the reliance of SOEs like WSC on the public treasury, it is also indicative of the urgent need to raise the tariff. . . WSC can hardly meet its obligation as is. No less an institution as the IDB has urged for the same.”
ADRIAN GIBSON, MP for Long Island. Photo: Shawn Hanna/Tribune Staff
added tax has taken some people by surprise. “We understand there are those who are going to be upset and disappointed that they have more taxes being required of them, but the reality is that at the end of the day the Bahamian public ought to be really upset at the way we have allowed this unchecked spending, and unchecked borrowing to go on year after year, which has gotten us to this point where we are today. “The reality is if we’re going to give ourselves a chance to be more progressive in the things and services that government provides,” he said, “as well as to be more holistic in the way we develop our country and be more inclusive. These are things we just have to face.” The Minnis administration has faced considerable criticism over its decision to increase the VAT rate by some 60 percent from
7.5 to 12 percent without seemingly consulting stakeholders. Critics have also raked the FNM party over its staunch opposition to the introduction and administration of the tax under the former Progressive Liberal Party government. Mr Turnquest previously defended the lack of consultation surrounding VAT’s increase, saying governments keep revenue measures close to the chest to discourage consumer behaviour that could upend government revenue projections. Yesterday, Mr Turnquest insisted there was “no way we can continue to borrow.” “The interest rate expense on these loans is going up astronomically,” he said. “It’s not even just the borrowing but the cost of financing the borrowing and I think people are missing that connection. We cannot continue to borrow on our future,” he said.
“Circumstances change. Things happen. We are only one major hurricane away from total disaster. We don’t need to get there to see what happens. We have examples around as to what happens.” Mr Turnquest added: “I understand the polls if in fact they are accurate. Certainly we don’t question whether they are accurate or not, that’s really up to the public to decide. We know no one wants to pay taxes but it is a necessary element unfortunately of the government.” For the scientific poll, which was conducted between June 2 and June 6, 800 respondents were selected by “random” telephone selection. The survey has a margin of error of 3.46 percent. M’wale Rahming, president of Public Domain, said the results are the latest indication the Minnis administration is heading
toward the “point of no return,” that moment when Bahamians’ disapproval of an administration may not be capable of reversal. Yesterday, Mr Davis maintained the VAT increase was an outright betrayal of the electorate’s trust, telling The Tribune those results evidenced a sentiment his party believes has been growing steadily since the general election. He confirmed his party will be supporting a march against the tax increase with the “We Rise” group on Thursday. “But it was not unexpected,” Mr Davis continued, “because the lies they told on the campaign trail are catching up to them. They lied to them, sowed lies, and it is what will be reaped at the end of the day. I just admonish the government to listen to the voice of the people, otherwise this does not bode well for the stability of the
‘WE’RE ONE HURRICANE AWAY FROM DISASTER’ from page one
Mr Davis said he fully expected the government to continue its election campaign narrative of demonising the Progressive Liberal Party for its own incompetence. A new scientific poll from marketing and research firm Public Domain, released on Sunday, revealed 76 percent of Bahamians opposed the 2018-2019 budget. The poll results also show 73 percent of people generally oppose the VAT increase to 12 percent from 7.5 percent, 22 percent generally support it and five percent said they don’t know. “It’s a poll,” Mr Turnquest said yesterday. “The thing about polls is it really depends on who is taking it and what the questions are and the mood at the time. We understand that the increase of value
country. “When I talk to business persons they are all decrying this sudden increase. I think the government just has to sit back listen and reverse itself. It’s not too late, I portend grave unrest in the sense of the uncertainty of the business community, having been caught off guard in the way they have. “At the last budget in June there is no foreshadowing of any increase. They just had a half-time report, a glowing report just six weeks ago about how what they’re doing is impacting the economy and then six weeks we’re struck with this? It’s deceit.” Mr Davis added: “I doubt one can claim legacy in this regard, this is just a continuing campaign exercise where they had to demonise the PLP and blame them for what they are doing, but I think it’s their own incompetence.”
D’AGUILAR: GOVT WON’T MOVE ON WEB SHOP TAX from page one
He added that the discussion on this matter needed to be shifted to the revenue and profitability of the industry. Meanwhile, State Legal Affairs Minister Elsworth Johnson said web shops should be taxed in a way that brings equity to the social downfalls of the industry. He said currently the industry was not being taxed according to the international industry standard. Gaming house operators have threatened to sue the government if it fails to engage them on what it called an “unconstitutional” and “discriminatory” sliding tax scale for web shops. Leaders of the industry are adamant there would be job cuts and the closure of hundreds of web shops nationwide should the government decide to move forward with implementing the increase. “As far as I am concerned it’s set in stone now,” Mr D’Aguilar said when he was asked by The Tribune if the sliding scale could be amended in the face of criticism. He also said: “I just find it difficult for people to conclude whether it’s high or not without actually seeing the facts. You will see that there is no discussion on what the revenue figures are, no discussion on what the profitability figures are,
so how can you conclude whether it’s high or not? So let’s have an intelligent conversation about it. “I just think that everybody is using the hype for their own political gains to push a certain agenda. Let’s look at the numbers. Let’s analyse the numbers then come to a conclusion so that’s what I intend to do.” “I don’t think it’s discriminatory at all,” the minister further commented. “I think you either agree that it’s a sin or it’s not a sin and if you agree that it’s a sin then all sins are taxed heavily. So, the crux of the discussion is where is the threshold, where is it high and where is it low. “That’s the $45m question and that’s what we have to decide and when I speak to Parliament I’ll speak to that matter.” Web shop operators have also raised concerns that 2,000 jobs will be lost and 75 per cent of the locations will close. They have said this hike is an intentional move to shut them down. To this he said: “Absolutely not. I just think that all of the operators have to step back, analyse their statements and see how it can adjust. “Yes you may have to adjust your business, but will it lead to widespread closures and shut downs? Absolutely not,” the tourism minister said. “I don’t think so at all. But everybody has their
view and everybody is pushing their agenda so all I would advise is you can’t conclude on this matter until you know the facts and until you know the numbers and there is what I find interesting is there is no discussion of the numbers, no one talks about the numbers.” For his part, Mr Johnson said Bahamians should not replace enterprise and industry with a game of
chance. He said in his opinion there is a 99 percent chance the gaming house will win while the patron loses. “I think that is in all things we have to tax the industry in a way that would bring equity to some of the social downfalls of that industry and how do we pay for it,” he said during his budget contribution. He also said: “I note the circumstances by which
gaming was legalised. The question remains whether the industry, which is a lucrative one, was properly taxed at its inception. “If one were to conduct a comparative industry analysis it would be clear that the current taxation regime does not meet the current international industry standard.” Under the new proposed sliding scale, those web shops earning up to $20m
in revenue will be taxed at a rate of 20 percent and those falling between $20m and $40 will be taxed at a rate of 25 percent. Others earning between $40m and $60m will be taxed at a rate of 30 percent while those in the range of $60m and $80m at a rate of 35 percent. Those between $80m and $100m at a rate of 40 percent and over $100m at 50 percent.