No Hotels Yet Prepared To Upgrade For VAT

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Emphasizing the tourism sector’s “strong opposition” to a July 1 value-added tax (VAT) implementation date, Frank Comito, executive vice president of the Bahamas Hotel and Tourism Association (BHTA), said that no major hotels have yet felt prepared to begin investing in the technology and other upgrades they would need to implement the tax.

According to Comito, hotels simply “can’t do that” in light of the uncertainty and lack of information relating to the tax at this stage. His comments further illustrate the lack of preparedness of the private sector in regards to VAT, including its largest players and revenue generators.

Meanwhile, out of concern over the likely effect of VAT on the tourism sector, the country’s primary economic driver, key tourism stakeholders have commissioned a study of their own on VAT which will look specifically at the “net effect” of the tax on the sector’s competitiveness, and how this in turn will feed into the level of visitor arrivals and economic growth overall.

Numerous tourism leaders have expressed fears over how a VAT system could be detrimental to tourism at a time when it needs to grow, as it may lead to price increases for visitors.

Speaking yesterday on the sidelines of a press conference held by the Coalition for

Responsible Taxation at the Bahamas Chamber of Commerce and Employers Confederation, in which the coalition announced the launch of its own economic study on VAT, set to be conducted by UK-based consultants, Oxford Economics, Comito said the tourism sector has hired Ernst and Young to conduct its study.

The preliminary results of the tourism sector’s VAT study should be available prior to May, while the final report should be available around the same time as the outcome of the Oxford Economics VAT study, he added.

“It’s a very sector specific study and what we are also doing is making sure that there is consultation and collaboration between the Oxford study and us.”

Pointing to the tourism sector’s opposition to a July 1 implementation of VAT, Comito said that there is simply not enough time to prepare at this point.

“The public and private sectors are not ready; there’s insufficient information, training, readiness. The guidance notes, none of that is available, and there are huge costs involved in equipping both with hardware, software and systems changes for businesses of all sizes to be able to comply and be ready. And that’s aside from the fact that we believe that additional economic impact analysis is essentially if we are to enter into this in the most informed way. We don’t want to upset the government’s revenue projections,” said Comito.

The executive vice president said he is thankful that the government has expressed its willingness to take into consideration the results of further analysis of the likely impact of VAT by the private sector.

“We’re pleased the prime minister has made that position known to us,” he added.

Gowon Bowe, co-chair of the Coalition for Responsible Taxation, said at yesterday’s press conference that the grouping is very concerned about both the level of private and public sector readiness for a July 1 implementation date.

“Time is not in their favor,” said Bowe, pointing to issues over whether the government has hired the people that will administer VAT, if they have adequately trained, and whether the business community has been engaged in “meaningful and tangible interface testing and understanding of how the system would work”.

“That’s not a criticism of the government, it’s just to say that these are very basic things you need to have in place. You have to look very realistically at what is the ability to actually forge ahead with it in the pledged timeline.

“Equally they have to respect the fiscal responsibilities they’ve inherited. So it can’t be a question of a deer in the headlights looking at the questions and challenges presented and they go into a state of paralysis,” added Bowe.

Alison Lowe
The Nassau Guardian
Published: March 14, 2014