By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading realtor yesterday said “too many grey areas” remain over Value-Added Tax (VAT), expressing fears that its implementation would be “a bloody mess” come the New Year.

Michael Lightbourn, head of Coldwell Banker Lightbourn Realty, told Tribune Business it was unclear how real estate sales agreements - signed, but not concluded before January 1, 2015 - would be impacted by VAT’s introduction.

Most sales contracts allow for a 90-day window to complete a real estate transaction once the deposit has been paid, meaning that deals agreed between October 1 and the New Year could drag into 2015.

Mr Lightbourn said that with the VAT law “kicking in” from January 1, he expected parties to a real estate deal would become liable to pay the 7.5 per cent tax on their realtor commissions and attorneys fees even if the sales agreement made no provision on this.

And he also said every aspect of a real estate transaction would need to complete “at the same time”, otherwise realtors may be left chasing clients for unpaid VAT on their commissions.

“It’s going to be a bloody mess when it starts. There’s too many grey areas,” Mr Lightbourn told Tribune Business of VAT. “We’ve had our accountants in here setting up things with the office manager.

“It’s just going to be a pain in the ass, obviously higher expenses for everybody, higher fees. It’s endless.

“They hope to extract $500 million a year out of the economy to balance the Budget. There’s nothing but a detrimental effect that can have on our economy. There’s nothing to it.”

Joining those also pointing the finger at government spending, Mr Lightbourn urged the Christie administration to identify areas in its Budget where it has significantly cut recurrent spending.

“The answer is: None,” he added, suggesting that all spending cuts in this year’s Budget had come from a reduction in capital spending.

“Government salaries are rising at a faster rate than revenues. They don’t pay their BEC bills. I hope to hell I’m wrong. I don’t know how we’ve been able to survive so long.”

“It’s not just real estate. It’s everything,” Mr Lightbourn said. “People are going to have less money to spend, no two ways about it.

“People will have to cut back on what they buy. Instead of buying stake, they will buy chicken. What I can buy for $100 this year will cost $107.5 next year.”

Mr Lightbourn expressed concern that Bahamian companies would suffer the same fate as their Barbadian counterparts in having to wait for up to two years for VAT refunds.

“The only thing this country has to look forward to next year is the opening of Baha Mar, which is a big plus,” he told Tribune Business. 
“My God, we need it so badly.

“We’re going to be so far in the hole, I don’t know if we’ll be able to get out of it. Expenditure is the major problem. The economy is down, so people are spending less.