By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian people will not accept Value-Added Tax (VAT) unless the Government convinces them they will receive “value for money” in return, a top QC warned yesterday.

Brian Moree, senior partner at McKinney, Bancroft & Hughes, told Tribune Business that the Christie administration would make little headway in fostering a ‘tax compliance’ “culture” without opening government spending to greater scrutiny.

Describing tax and fiscal reform as “a two-way street”, Mr Moree said that in return for Bahamians paying more taxes, the Government had to expose its spending to “higher levels of transparency and accountability”.

He added that the Christie administration had “yet to make the case” that it would spend the VAT revenue windfall wisely, which was a key factor in why so many businesses and individual Bahamians were reluctant to buy-in to its fiscal reform plans.

The leading QC said Bahamians would only feel they were getting ‘value for money’ if they saw a reduction in the national debt, improvements to infrastructure and amenities, and more efficient public services.

And he warned that the extensive enforcement powers contained in the VAT Act and regulations, including six-figure fines and possible jail terms, would not be enough by themselves to maximise revenues.

“The Bahamas is really moving from a zero or low-tax jurisdiction to a jurisdiction which is going to have a direct form of taxation,” Mr Moree told Tribune Business. “That’s a big change for Bahamians.”

Accepting the Government’s argument that it needed new revenue streams to get the Bahamas out of its debt hole, and to “properly govern” the country, Mr Moree backed calls by others in the private sector for the administration to fulfill its side of the bargain.

“If we’re now going to get to a position where Bahamians are paying a more direct form of taxes, it must be entirely reasonable that Bahamians are going to expect higher levels of accountability and transparency in public spending,” he said.

“If you want Bahamians to pay more taxes out of their pockets, you must accept it is reasonable for them to expect a higher level of accountability for the spending of that money, and a higher level of transparency.

“One fundamentally goes with the other. The basis of any taxation system is fundamentally not enforcement, although it’s a critical part of any system. It’s ultimately based on acceptance by the general public that the majority of their tax dollars are spent wisely, and that’s the key. As a Bahamian asked to pay more taxes, I expect to have improved public services.”

Mr Moree said both the current and future governments needed to accept that, post-VAT, they would be “called to account at higher levels for how they spend these tax monies”.

Such a “partnership” between the Government and taxpayer had yet to be developed, the leading QC describing this as vital to giving Bahamians confidence they would “get value for money for their taxes”.

“I don’t think enough has been done to promote this debate and demonstrate to the Bahamian people that if they’re called on to pay more taxes, they will get greater efficiency out of government in public services,” Mr Moree told Tribune Business.

“They will get higher levels of transparency in how their money is spent, and higher levels of service.

“I don’t think that case has yet been made. It’s a critical point to develop a culture in the Bahamas that accepts the obligation to pay taxes in order to ensure the proper development of our country. This is a debate that needs to take place,” Mr Moree added.

“It’s a two-way street. We as Bahamians must accept the need to pay more taxes, and political leaders have to account for their level of stewardship, be more transparent and, as we pay more taxes, we see a more efficient level of government services, improved amenities and infrastructure.”

The well-known QC told Tribune Business that Bahamians had to know “I’m getting something in return for my taxes” if VAT, and wider fiscal reform, were ultimately to succeed as intended.

“It is difficult for any government to rely on its coercive powers to compel people to pay taxes,” Mr Moree reiterated. “There are limits to enforcement.

“You’ve got to show the public there’s value for them, that it’s in their interests to pay these additional taxes. Because public services, amenities, infrastructure are improved, the quality of life is enhanced.

“As long as the public thinks their money is being spent unwisely, imprudently, there’s going to be no compliance in paying taxes.”