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Last Updated: Feb 13, 2017 - 1:45:37 AM |
Nassau, Bahamas - Remarks by Hon. D. Shane Gibson, M.P.,Minister of Labour and National Insurance and Minister of the Public Service during The Value Added Tax Bill, 2014 delivered on 13th August 2014:
Mr.
Speaker, I wish to thank God once again for another opportunity to
stand in this Honourable House as I represent the great people of Golden
Gates. Mr. Speaker, I firmly believe that the Government is on the
right track in moving ahead with the Value Added Tax (VAT) legislation
as most progressive countries around the world including the European
Union with its 27 member countries in the United Kingdom and Europe as
well as Caribbean nations such as Trinidad and Tobago, Jamaica,
Barbados, St. Lucia and Grenada have already adopted this form of
revenue taxation and their economies are indeed benefiting from the
same.
Mr. Speaker, St Anne's asked us, if we have a plan to spend the additional money in taxes which VAT will bring.
Well....which
Bahamas is he living in? We need funding for schools, roads, health
care, airports, RBDF vessels, the purchase and maintenance of equipment,
Bahamasair aging fleet, current public officers' wages and increases,
docks, the social safety net, securing of our borders (RBDF), securing
of our country (RBPF), garbage collection, and the URBAN Renewal
Programme.
It is always interesting to see how members opposite
come into Government, run up huge Government debts, obligate the country
to hundreds of millions of dollars in future debt, with no idea how the
bills would be paid and then they come into this place and tell us and
the Bahamian people, that now is not the time to introduce measures to
meet these and future obligations of The Bahamas, which in most cases,
they are responsible for.
Mr. Speaker
Whatever we come here to do,
they say now is not the time and what we are doing is not the right
thing to do, even though when they had an opportunity to do something,
their solutions were inadequate.
If you listen to some persons
commenting on national issues, one would get the impression that persons
think that we go to bed one night and wake up the next morning,
deciding to make major decisions impacting our country.
They give
the impression that we don't act, after exhaustive advice and
consultation, from local and international advisors and stakeholders.
Then,
sometimes, members opposite act as though all Governments of The
Bahamas, don't get most advice from the same persons and agencies.
"How does Government generate most of its revenue?" :
Taxes (customs duties, stamp duty, excise tax, various license fees etc) and other fees, for example, work permit fees.
Expenditure has been streamlined in all Ministries and quasi-government corporations which receive subsidies.
For
many, many years, different Governments have been running a budget
deficit and with these hundreds of millions of dollars in deficit each
year, it NEVER takes into consideration, all of Government's
obligations.
The seriousness of our finances in The Bahamas are
sometimes camouflaged by “one-off” payments, like the millions of
dollars the Government got from the sale of BORCO, BTC, and stamp tax
on the sale of the Commonwealth Brewery, etc.
It would be irresponsible for us as a Government to sit idly by and do nothing.
As
you are aware, Mr. Speaker, VAT will be applied to most goods imported
into The Bahamas and most services generated within The Bahamas. It is
essentially a consumption tax which is borne or paid for by the final
consumer.
Mr. Speaker, businesses, various merchants and service
providers who are VAT registrants will benefit from this tax as they
will be able to recoup the taxes they incur on all operating expenses
which relate to the goods and services they supply to their customers.
The difference in the taxes, is remitted to the Government of The
Bahamas. This means that businesses will receive tax credit even if it
is related to capital investments in their operations. Unlike customs
duties, therefore, VAT will not be a sinking cost that remains within
the business and thereby creates a disincentive to investments.
Therefore,
Mr. Speaker, in a nutshell this type of revenue application and
collection is not complicated except where persons intentionally set out
to make it complicated. If everyone Mr. Speaker, applies himself to
following the law they will find that the system can be made flawless or
at least have minimal complications that can be easily corrected
because when one looks at the provisions of the proposed legislation it
is easily seen that the legislation is facilitative.
Mr. Speaker,
only VAT registrants can charge VAT and only goods and services that
are taxable can attract VAT rates and finally Mr. Speaker, only
businesses and merchants and service providers whose businesses meet the
VAT threshold of $100,000 of taxable sales and are VAT registered are
legally entitled to charge VAT.
Mr. Speaker, I wish to turn my
attention to the role that the Consumer Affairs Unit of my Ministry is
expected to execute following the implementation of the Value Added Tax
in January 2015.
As indicated by my colleague Minister of State
for Finance, the Hon. Michael Halkitis, when he tabled the Value Added
Tax Bill, 2014 in Parliament, “The Government of The Bahamas is
reviewing its entire system of consumer protection to ensure that
unscrupulous individuals do not use the process of tax reform as an
excuse to adopt predatory practices. The Government is committed to
enhancing these protections whether through legislative measures and the
provision of additional resources.”
With that being said, Mr.
Speaker, it is incumbent on my consumer affairs officers to step up
their vigilance in their daily inspections of those merchants and
service providers engaged not only in the retail and wholesale of goods
on the breadbasket items, but with merchants and service providers
legally registered to charge VAT to ensure that they are the only ones
doing so.
Mr. Speaker, it is to be expected that the introduction
of the value added tax system will usher in a new set of challenges for
the Consumer Affairs Unit in terms of their ensuring that merchants and
service providers do not take advantage of the consuming public by
adding other charges to goods and services that are “vatable”.
Consumer
Affairs officers’ workload will increase exponentially in the early
stages of this new system, Mr. Speaker, and therefore it is essential
that the necessary efforts be put in place to equip this Unit with the
tools and manpower needs with the requisite skills to enable them to
converse with the public in a professional and effective way for easy
transition.
Mr. Speaker, my Ministry will be working in tandem
with the Ministry of Finance to determine the ways in which the Consumer
Unit and the Ministry of Finance can amalgamate their functions to
ensure that consumers are protected consequent to the implementation of
VAT. Consumer officers should therefore be well versed with the
legislation pertaining to VAT so as to be able to explain the provisions
of VAT to consumers and merchants/providers.
I am happy to
announce that consumer affairs officers will be exposed to the
fundamental training on VAT that is being delivered to the staff of the
VAT Department, and that they will work closely with the Ministry of
Finance in the education process for consumers. It is expected that an
educational initiative will be undertaken and made accessible to all
Consumer officers throughout New Providence and the Family Islands.
A
further initiative, Mr. Speaker, can be undertaken to establish a set
of protocols to be employed among various Government ministries and
departments for cooperating with each other, offering assistance with
information transfer to the appropriate agency to take the required
action where infractions have been noted to be in contravention of VAT.
Consumer Affairs officers will be able to access information on various
businesses, for example, the listing of all VAT registrants, so as to
better police those businesses and protect the consumer—indeed the
general public will have access to the list of VAT registrants.
Some of the important elements of the consumer protection framework that are built into the VAT design are the following:
•
The price on the shelf is the final price that the consumer will pay.
In other words, there can be no further adjustment to the bill at the
cash register, because the provision for VAT must have already been
made.
• The cash register receipt must always itemize the amount of
VAT that was paid. Business will not be able to claim that they are
charging VAT and not be able to reveal it to the consumers.
•
Receipts will have to display the tax payer identification number of the
business as proof that they are allowed to collect the VAT.
• Like the business license, all companies that charge VAT will have to display their registration certificates.
Finally,
Mr. Speaker, as you are aware, the Consumer (Protection) Commission
having been appointed, will also play a major role in protecting the
interest of consumers. This Commission exists to provide redress for
any consumer who has been adversely affected by goods purchase or
service not being provided in accordance with a contract for service. I
therefore take this opportunity Mr. Speaker, to encourage all consumers
to remain vigilant as they traverse the market place and report any and
all infractions to the Consumer Protection Commission.
Mr. Speaker, the Golden Gates Constituency is pleased to support the Value Added Tax Bill 2014.
© Copyright 2014 by thebahamasweekly.com
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