[xml][/xml]
The Bahamas Weekly Facebook The Bahamas Weekly Twitter
Community : Service Organizations : Bahamas Chamber of Commerce Last Updated: Feb 6, 2017 - 2:32:04 PM


BCCEC'S response to the Budget Communication
Jul 8, 2013 - 5:12:43 PM

Email this article
 Mobile friendly page
Bahamas Chamber of Commerce and Employers Confederation’s response to Budget Communication:

After having consulted with our membership and the business community at large, including private sector employers, there have been grave concerns expressed over some of the pronouncements in the 2013/14 Budget Communication as to relates to certain revised taxes and some new tax initiatives by the Government. Whilst the business community accepts that taxes are necessary to maintain fiscal soundness of our economy, we believe that proper balance must be achieved so as not to stifle growth of the economy or unduly increase the cost of living in The Bahamas, in an already high-cost jurisdiction.

The Bahamas Chamber of Commerce and Employers Confederation through its membership represent over 90% of all private sector business and working persons in the country, including self employed persons. The Government should always be mindful of this fact and should pay better attention to the voice of the Chamber.  The fact that the budget was drafted and presented to Parliament without any input from the business community and employers in The Bahamas was most unfortunate, especially since the tax policies of the Government are likely to have the most affect and impact on the business community throughout The Bahamas; the community represented by the BCCEC.

We remind the Government that it is the private sector that drives the economy. It is small business that is most equipped to create employment. As a general theme, the budget does not do enough to support small business growth.

We recommend theGovernment on their projected capital works and development, schools,hospitals, new vessels and manpower for the police and defense forces. We alsocommend the Government for their housing program and the further development ofthe Urban Renewal 2.0. However, we would also hasten to caution the Governmentagainst any excessive spending, excessive burrowing and encourage more prudentfiscal management of government resources and find ways to reduce wastage inthe public sector.

 BCCEC applauds and supports the Government’s ambition to improve their cash flow and manage their fiscal policy. There is however not enough focus on cutting  , eliminating waste, reducing “leakages” in revenues and enforcing collection of taxes that now exists.

 The BCCEC is ofthe view that, had they been consulted during the preparation of the nationalbudget, many of the initiatives in the budget would have been amended orimproved to be more conducive do doing business in The Bahamas. BCCEC wouldrecommend to the Government of The Bahamas, that any future budget preparationsshould be done in consultation with the business community via the BCCEC to ensurethat the taxes and fiscal targets set are reasonable and achievable, especiallysince the taxes are being applied to the business sector, including privatesector employers.

 It is concerningto BCCEC, that very little mention was made of the domestic business sector in the Communication as far as any potential incentives are concerned, but most,if not all of the taxes in the schedule would have a direct impact on privatesector business in The Bahamas, including increase in

Customs processing fees, increase in business license fees, increase in duty of automobiles, increase in duty on “Sin Tax”, proposed introduction of VAT, an the list goes on.

 One of the majorareas of concern relate to the new Customs Management system set to have beenimplemented on 1st July 2013.

 For example, we have a grave concern about the new form of taxation as it relates to the automotive industry. In 2010 that industry was subjected to new increased taxes of increased business license fee increases of 50%, increased national insurance contributions, increased percentage of exercise taxes on automobiles and to top it off, revaluing of property for increases in property taxes. All of this while the global economy and mainly our local economy was in a down turn.

 All of the above items have put a tremendous strain on the local new car dealers. Actually, the increase in taxes has forced the buying public to revert to mainly used cars. This has had to have had an effect on Governments revenue and not to mention what it is doing to the environment with all of these aged used cars being imported.

 It is unfortunate and regrettable that some of the new car dealers will likely  be lost in this go round of new taxes. We understand the need for taxes to support the Governments annual budget, but there is a limit that one company can bear before going under or reducing its staffing levels to fit the economic situation that will be upon us.

 One suggestion after looking at the budget as it relates to the automobile industry is to raise the $10,000.00 threshold to$15,000.00. This would allow for some new cars to fall into the 65% exercise tax level and would help the consumer who is shopping for a small budget type vehicle. Vehicles such as the Honda Fit, Hyundai Accent, Kia Rio, Suzuki Swiftand Toyota Yaris. Otherwise, many Bahamians and residents will be forced to look at purchasing a used vehicle and again, Government will lose on revenue.

 At the same time, the Government should implementan age limit on used car imports. Jamaica, Barbados and Trinidad have all donethis along with other Caribbean countries. Their age limit ranges from 4 to 5years old. This will have a positive effect on Governments revenue as what willbe imported will be of a greater value, hence more excise taxes. This will alsohave a positive impact on the environment as vehicles with a longer life spanand more efficient due to newer technology will be imported.

 The above would be in line with the philosophy with respect to the environmental levy.  This, we applaud and is long overdue provided it is within reason. BCCEC has requested a copy of the draft environmental legislation from the Government but has yet to receive a copy. BCCEC has resident environmental experts who have assisted other governments in the region in drafting their environmental legislation and who are also prepared to avail themselves to the Bahamas Government to provide them with sound expert advice as well.

 We note the broad approach of a $1 levy on “tires” generally, which disproportionately increases the costs of bicycle tires relative to commercial tires. This will regrettably impact businesses in this industry as they will be unable to pass this cost on to consumers.

 Further, as it relates to the “Sin Tax”, the revised and new taxes being applied to the tobacco industry from 280% to 15 cents per stick in a carton of cigarettes, fo example will most likely lead to an increased proliferation of alternative markets for the illegitimate importation of these cigarette products and may also cause an increase in the counterfeit tobacco products. We accept that smoking generally is not good for one’s health, but it becomes more of a concern with the quality of tobacco products being imported into the Bahamas will likely cause more illness among users of those products. The problem with that scenario is that those persons will likely become a burden on the Government’s health facilities which is already facing challenges of its own.

 The tobacco industry has no difficulty with the Government increasing the taxes on their products. However, we would advise the Government to cause the increases in the taxes to be phased in over a  three (3)year period to allow the industry to make and prepare for the necessary adjustments in their financial models. That approach we believe, will also allow the Government to measure the increase in revenue year over year over the period suggested.

 As it relates to the ”Sin Taxes” derived from the import of tobacco products, we would like to see those taxes applied to public health education regarding the danger of smoking, as well as applied to general education and youth development in The Bahamas.

 Nassau retailers have experienced a decline in business every year since 2008.  A reason for the decline, apart from the worldwide recession has been the cost of doing business in The Bahamas,including overhead for retailers and government taxes on those businesses.

 Further, with fewer tourists traveling around the world because of the worldwide recession,tourists are looking for value destinations where they will experience a good time and get value for their money. The Bahamas is known to be an expensive destination, not only for tourists, but is also an expensive place to live,work and play. As a result, The Bahamas may not be the destination of choice for tourists, or even expatriate workers when one considers value for money. We are simply too expensive.

 Perhaps one of the major mis-steps by the Government is its new business license fees on the food industry, with its already limited margins. The reality is that the majority of sales come from price controlled items (i.e. tuna, corned beef,rice, grits, flour, etc).  With the taxation measures Government has imposed on large food businesses who have significant sales volume because of sales of these price control items (in large part) this will result in major increases of food prices as the reality is food companies will have to find away to absorb this increase.  Given the restrictive nature of price control, wholesalers and retailers are unable to increase prices on the major volume items, which in turn means we will have to increase the cost on all other items significantly. This in our view needs to be revisited. This is a recipe for unemployment, increased food prices and further burden on the masses the Government believes it is trying to help. Further, the double whammy of price control and higher taxes pushes many healthy food choices out of the price range of those that need it most, indirectly impacting the already unhealthy populous.  These principles apply to all price controlled sectors that are high volume, low margin businesses!

 Consider the Bay Street or Over-the-Hill merchant for example. They have to buy an item at cost from their foreign supplier, pay for exchange control and wire transfer charges, pay for shipping, freight and handling, pay for customs brokers to clear their freight on arrival in The Bahamas, customs duty and stamp tax, now they have to pay 1% to have their customs application processed, pay for trucking to have their merchandise delivered to their locations (consider the additional cost to have these items delivered to the family islands), then addon margins all before they are able to sell the first item. We put the merchants through this very onerous and expensive process, then we give Customs exemption to individuals to import their products from abroad. It is now expected for the exemption to be extended to children under the age of twelve (12)as well. How is the business community expected to compete and provide a reasonable service while trying to sustain their businesses?

 We eagerly await discussions on the harmonization of customs duties with the new VAT. Rather than increases in customs duties we would anticipate reductions in line with WTO mandates and also to avoid excessive taxation. In an effort to promote and support the sustainability of the local merchants and businesses in The Bahamas, particularly in the wholesale and retail sector, it is our recommendation that the Government remove the import duties for all licensed and qualified importers, charge the traditional stamp tax and the new VAT instead. Customs duty however, should continue to be levied on private individuals and importers of goods. That way, the wholesalers, retailers and other qualified importers will be able to start offering their products to the general public at much lower rates, essentially competing with the exporting countries for the same goods. This will be a good approach, especially since all importers are now required to pay as much as 1% of the value of their imported goods as a Customs processing fee. The Government will earn its revenue through stamp tax, VAT as the processing fees, along with full duty charged and payable to all other non-qualified persons. It should also encourage shoppers to shop at home, “buy Bahamian” and support the local economy of The Bahamas. Otherwise, the incentives given for individuals is an encouragement to shop abroad and support the economy of South Florida, for example. Citizens will understand that supporting local business saves jobs and grows the economy.

Qualified persons will include all persons possessing a valid business license for importers in good standing and must be members of the Bahamas Chamber of Commerce and Employers Confederation who can assist the Government in monitoring these qualified persons and their activities.

While we note Governments pronouncement that “efforts have been focused in the enhancement of the suite of Business License Services, including the Registrar General Department…”,BCCEC has initiated discussions with the Government of The Bahamas to take over the annual business license services for both the issuance and renewal of business licenses. We believe that this will be a wonderful display of the public-private partnership where everyone benefits from this initiative. BCCEC proposes to improve the efficiency of the process, upgrade the infrastructure and maintain a more accurate register of licensees and more efficient collection and accountability of fees, well as improve upon the statistical and data collection and management.

The Government also announced in the Budget Communication, that it is currently reviewing all aspects, including costing of the National Health Insurance Scheme. Further,that they are committed to review such a scheme with a view to have it implemented during this term in office. BCCEC is pleased that its CEO, Mr.Edison Sumner has been appointed to be a part of that Steering Committee as well as the Committee to implement VAT and the Central Revenue Agency. We welcome the opportunity to represent the views and concerns of the private sector business and employers on those Committees.

With respect to the new National Training Agency, the Chamber welcomes this initiative and look forward to meaningful consultation to ensure that it is most impactful in meeting the needs of employers, and bridging the skills gaps to “provide job placement assistance to workers in finding employment”.Further, the BCCEC’s Chamber Institute is actively engaged in training and development of skills and productivity training sessions on a consistent basis and has trained thousands of persons in various sectors since its inception. BCCEC welcomes the opportunity to collaborate and find synergies with the NTA.

Bookmark and Share




© Copyright 2013 by thebahamasweekly.com

Top of Page

Receive our Top Stories



Preview | Powered by CommandBlast

Bahamas Chamber of Commerce
Latest Headlines
Arbitration process next topic of GB Chamber luncheon
Bahamas Chamber signs MOU with DC and Baltimore Chambers
Junkanoo Coin Presented to Namibia Ambassador
Scholarships to help students ‘Rebuild’ family islands
Businesses open, boats re-floated, hundreds back at work thanks to Rebuild Bahamas