By SANCHESKA BROWN

Tribune Staff Reporter

sbrown@tribunemedia.net

PRIME Minister Perry Christie said yesterday he is “absolutely certain” value added tax (VAT) will be a “major success story for the people of the Bahamas.”

During his 2014/2015 mid-year budget communication, the prime minister said despite the “naysayers”, specifically the Free National Movement, the implementation of VAT on January 1 was “remarkably smooth”. He added that the new tax ensures the government “is better positioned” to make the vital investments in healthcare, education, culture, public safety and security.

Mr Christie also announced that in view of the public outcry for transparency since the implementation of this new tax, the government will commission the preparation of a policy paper on fiscal responsibility legislation to guard against “profligate” or wasteful government expenditure.

“VAT is going to be a major success story for the people of the Bahamas,” Mr Christie told the House of Assembly.

“Believe me when I say that. I am absolutely convinced of it. We have exceeded our target for VAT registrants by over 1,694. And, in the all-important categories of very large registrants, with annual turnover greater than $20m, and large registrants with turnover greater than $5m, but less than $20m, we exceeded our registrant target by seven per cent. This bodes well for VAT revenue collections as the combined category of very large and large firms, while accounting for just nine per cent of total VAT registrants, is expected to generate between 70 per cent to 80 per cent of total VAT revenue,” he said.

He also cautioned businesses of the repercussions of not complying with VAT laws.

“I would stress, however, that the anticipated revenue gains from VAT are greatly contingent on dedicated and proactive compliance efforts,” Mr Christie said.

“I therefore urge businesses that are subject to VAT to be fully mindful and respectful of their obligations under the law. Full compliance is not only their civic duty and legal obligation. Compliance is also the only way to avoid the stiff penalties and fines that will come from rigorous enforcement. I need to sound a reminder that there is an obligation for those who are above the $100,000 turnover threshold to register, and to be forthright with the VAT Department about the size of their operations.”

Mr Christie said efforts have also been made, in conjunction with the Clearing Banks Association, to allow for the online payment of all major taxes, including VAT.

He also said plans are underway to move the Inland Revenue and VAT Department headquarters to a new modern location at Carmichael Road and Alexander Blvd.

Last year, New Zealand tax consultant Don Brash recommended that the government implement a Fiscal Responsibility Act before the implementation of VAT to build public confidence in government spending.

Mr Christie yesterday said in view of the gravity of this matter from a public policy perspective, and in order to enlighten the debate in a Bahamian context, the government will commission the preparation of a policy paper on the issue of fiscal responsibility legislation.

He said: “Upon its completion, the paper will be released for public consultation and discussion such that there can then ensue a full and balanced national dialogue of this issue. This will allow informed discussion on whether this type of legislation is appropriate for the Bahamas at its current stage of development and, if it is deemed to be appropriate, which of the many models of fiscal responsibility legislation would be the most appropriate for our country. It is hoped that this paper can be completed and published by the summer of this year, with any final recommendation on whether legislation is appropriate in the Bahamian context to be presented to Cabinet by the end of this calendar year.”