By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A 5 per cent payroll tax administrated via the National Insurance Board (NIB) could generate $190 million in annual revenues and enjoy a more “seamless implementation” compared to Value-Added Tax (VAT), a Tax Coalition co-chair argued yesterday.

Gowon Bowe, speaking at a Bahamas Society of Engineers (BSE) luncheon yesterday, said such a tax administered through NIB’s existing infrastructure would be less costly and simpler to collect.

“There has been great support from the business community to take on this cost when comparing the cost of implementing VAT systems and administration,” said Mr Bowe.

The Government is expecting to raise an extra $200 million in annual revenues from its proposed Value-Added Tax (VAT), and $500 million gross, with the $300 million difference replacing foregone Customs duties.

Noting that a sales tax had not been dismissed entirely as a reasonable alternative, Mr Bowe said: “If you are going to have a consumption-based tax, VAT is going to be superior to a sales tax, the reason being that there is a self-regulating element of VAT.

“Sales tax does not capture services; it only captures good. If we are by and large a services economy, and your concern is that services have largely gone untaxed, at this point in time we need an initiative that is going to bring the service economy into the taxable realm.”

Mr Bowe added that some of the other revenue-raising initiatives suggested by the Coalition included taking back the country’s airspace, introducing a shipping lane tax and regulating and taxing web shops.

“Some of the things we are looking at as alternatives are what can be an immediate increase in taxation to enable the Government to cut into the deficit they are currently running on an annual basis,” said Mr Bowe.

“We are looking at what can be immediate to help towards the initiative, so that any delay with a wider fiscal and tax reform does not allow us slip further into havoc while we are trying to figure it out. It’s not delay for the the sake of delaying; it’s delaying to ensure that we get it right.”

Mr Bowe said he did not believe VAT would ultimately generate more business for accountants. He explained: “Those who can afford it should have the individuals capable of doing it.

“Those who can’t are not going to miraculously be able to afford it just because it’s being implemented. That has been the myth: that the accountants love this.

“For me, other than the initial up front advice that larger businesses would look for in terms of structure so they can minimise their tax burden, that will be a short lived consultancy period and, after that, it will be the people who work within the organisation that is going to do it.”