Thursday, June 8, 2017
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Super Value's owner yesterday said the supermarket chain would save $444,000 annually based on the Budget's Business License fee cut, as a Cabinet Minister branded the tax a "job and business killer".
Rupert Roberts told Tribune Business that the 25 basis point cut to the 1.5 per cent Business License fee rate could "make the difference between a profit and a loss" for his larger chain.
"We're saving $444,000," he said. "That could mean a difference between a profit and a loss.
"We also have a choice. That goes back to the bottom line, or we share it with consumers to give them better prices. It will be a biggee, because if you're having a bad year that could be your profit."
Mr Roberts added that the Business License fee cut would not impact his other chain, Quality Supermarkets, as its three stores have yet to reach the $50 million annual sales level at which the 1.5 per cent Business License fee rate kicks-in.
The Minnis administration's move to eliminate the 1.5 per cent rate, and drop it to 1.25 per cent for high turnover businesses, will chiefly benefit large companies such as Super Value and its main rival, AML Foods; Cable Bahamas and the Bahamas Telecommunications Company (BTC): and the three oil majors - FOCOL Holdings, Rubis and Sol Petroleum (Esso).
Companies with turnovers or less are unaffected, and some observers will suggest this lends credibility to both the Progressive Liberal Party (PLP) and Democratic National Alliance's (DNA) charge that the Budget "favours the rich but does very little for the small man".
However, K P Turnquest, minister of finance, yesterday acknowledged that the Business License fee generally was driving some businesses into losses and closure.
Agreeing that the Government's taxation must not drive companies out of business, he said: "We understand the difficulties with the Business License fee. As currently structured, it's disadvantageous to businesses and a job killer.
"It's unfair in how it's calculated, and drives some businesses into a loss position because it's calculated on turnover. Small margin businesses, gas stations and food stores, those businesses with thin margins, it can cause those businesses to lose money."
Mr Turnquest emphasised that the Government should not be forcing businesses into closure "because of it's insatiable need for tax revenue", and promised that the Minnis administration would review the Business License fee regime during its five-year term to see what changes could be implemented.
No details or timelines were provided, though, for a tax that still represents a key $150 million annual revenue source for the Government.
The former Christie administration, in its 2013 'White Paper' on Value-Added Tax (VAT) had pledged to reduce Business License fees to a flat annual fee of $100 across-the-board once it could predict with certainty how much revenue the new tax would generate. This promise, though, was never put into effect.
The private sector has long argued that Business License fees represent one of the most inequitable and regressive forms of Bahamian taxation, given that they are calculated as a percentage of gross turnover rather than profits.
Apart from forcing companies into losses and closure, they have also resulted in many companies paying more in Business Licence fees than they earn in annual profits. High turnover, low profit margin businesses, plus those impacted by price controls, like auto dealers, pay considerably more than low volume, high profit margin companies.
Comments
DDK says...
"The Minnis administration's move to eliminate the 1.5 per cent rate, and drop it to 1.25 per cent for high turnover businesses, will chiefly benefit large companies such as Super Value and its main rival, AML Foods; Cable Bahamas and the Bahamas Telecommunications Company (BTC): and the three oil majors - FOCOL Holdings, Rubis and Sol Petroleum (Esso)."
WHICH PEOPLE'S TIME IS IT? (SURELY NOT BIGGEST CAMPAIGN CONTRIBUTORS?)
"Mr Turnquest emphasised that the Government should not be forcing businesses into closure "because of it's insatiable need for tax revenue", and promised that the Minnis administration would review the Business License fee regime during its five-year term to see what changes could be implemented."
MANY SMALL BUSINESSES DON'T HAVE ANOTHER YEAR, MUCH LESS FIVE.
WHAT'S ALL THIS TALK ABOUT IMPORT DUTY REDUCTIONS ON COMMERCIAL WASHERS AND DRYERS? WHAT NEXT?
Posted 8 June 2017, 4:39 p.m. Suggest removal
Well_mudda_take_sic says...
You cast your vote on a whim and a prayer....all the while thinking that without hope there could never be anything to live for. Well, welcome to the real world....the one I feared most - a government led by the very greedy and power hungry Minnis. It's likely you nor I will have an opportunity to THINK, THINK, THINK in another five year's time.
Posted 9 June 2017, 2:09 p.m. Suggest removal
TalRussell says...
Comrades! Just one businessman's will save Half Million Dollars 'every year' going forward but "KP" rules that for thousands ordinary people that VAT' going stay on 'breadbasket' items. Talk about Red Shirts knowing how and whom play 'corporate welfare' froward for? {I don't have make this up].
Posted 8 June 2017, 4:49 p.m. Suggest removal
Alex_Charles says...
while this irks me... I'm willing to say screw it if they stabilize and slash spending for the next fiscal year. We are really on the cliff economically here and we are in atrocious shape. This is do or die. While I understand the thought behind this move, I'm not sure it will have a significant impact.
Posted 8 June 2017, 6:29 p.m. Suggest removal
TalRussell says...
Comrade Alex_Charles, just think reds as non-transparent party of corporate welfare - whilst they're stingy to helping out thousands to better afford their breadbasket items from shelves Rupert's food stores chain.
Posted 8 June 2017, 6:57 p.m. Suggest removal
birdiestrachan says...
It is the peoples time. This is what they voted for, so they should relax and enjoy. my question
is how do they make up the short fall. If there will be no VAT on electricity they will also benefit.
The rich will get richer and the poor will get poorer.
Posted 8 June 2017, 7:07 p.m. Suggest removal
ThisIsOurs says...
Like Dane Joan said, The Lord used a donkey, well take the donkey over the last five years, perhaps we can get it to help us accomplish something
Posted 8 June 2017, 9:15 p.m. Suggest removal
birdiestrachan says...
Commercial washers and dryers who owns wash houses? I say it is all good I am not
sorry for the people.
Posted 8 June 2017, 9:52 p.m. Suggest removal
banker says...
It is a stupid and regressive idea to pay for a business licence based on pro-forma turnover. A flat fee is what happens in more other jurisdictions.
Posted 9 June 2017, 6:35 a.m. Suggest removal
ohdrap4 says...
it is actually a smart thing to do.
introducing different vat rates might increase consumer prices, look what happened at the banks, they created service fees to soften their vat impact.
80% or more of their sales is on price controlled items, so the drop on duty reflects on the price and the business tax reduction may alleviate the price of other products
this is the quickest relief they could have provided at this time. A girl needs to eat ramen noodles.
as to focol, you know they will just have theri profits for lunch.
Posted 9 June 2017, 8:42 a.m. Suggest removal
Islandboy242242 says...
lol he said we have a choice, not "oh yes prices should be decreasing as of April 2018, once we're sure of the license decrease" ............"We also have a choice. That goes back to the bottom line, or we share it with consumers to give them better prices. It will be a biggee, because if you're having a bad year that could be your profit."
Posted 9 June 2017, 9:36 a.m. Suggest removal
killemwitdakno says...
Are they willing to only buy local onions in a trade off?
Posted 9 June 2017, 3:38 p.m. Suggest removal
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