New Zealand VAT consultant Don Brash said yesterday that he still “absolutely” recommends a Freedom of Information Act (FOIA) and Fiscal Responsibility Act (FRA) for building public confidence in value-added tax (VAT) and the government’s usage of its tax revenue. Speaking with Guardian Business, Brash clarified that while he is not in the country to specifically address those concerns, he personally endorses the two forms of legislation, which members of the private sector continue to demand. “It is important for the public generally to understand why this tax is needed. The more the public understands about the fiscal situation, the better. Therefore, I would encourage the government to be as open as they can be about the [country’s] fiscal position. A FOIA or FRA, or ideally both, clearly helps the public to understand the situation,” he said. While Brash noted that New Zealand did not introduce a FRA until five years after it had implemented VAT, he said the country enjoyed fiscal surpluses for many years following the legislation’s passage until the 2008 financial crisis. Brash added that New Zealand’s economy is expected to achieve a surplus by summer 2015. Numerous private sector entities, including the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and the Coalition for Responsible Taxation (CRT), have frequently warned the government against implementing the new tax without first providing legislation for wider fiscal reform. Despite these suggestions, the government has yet to announce any concrete plans to revisit the laws. Although Brash indicated that the country’s overall preparedness for the tax is “looking very good” since his last assessment in April, he noted that the government needs to address several key matters to bolster public understanding and support of the tax. “It’s not quite ready yet, I think the government acknowledges that they still need to do a few things. They have to actually formally promulgate the circle of rules. “The act has been passed, the regulations have been issued, internal policies have been developed, guidance notes have been put out for many specific industries, but the rules have to be formally promulgated,” said Brash, adding that he has seen a draft of the rules and understands that they will be circulated before VAT’s implementation. Brash also noted that the appointment of a VAT comptroller is a high priority for the government. While Financial Secretary John Rolle serves as the acting VAT comptroller, it remains unclear if he will continue to hold the post following VAT’s implementation. Brash said that VAT registration continued past the November 30 deadline and the number of registrants to date was “pretty pleasing”. He reiterated that the New Zealand VAT model, characterized by a lower rate and virtually no exemptions, is the right choice for The Bahamas, and argued that the tax will help cut down other tax dodging practices by requiring registrants to get their business license and national insurance fees in order. However, Brash could not provide comment on some lingering concerns with the tax, including details on the Central Revenue Agency (CRA) tasked with administrating the tax, or the likelihood of increasing VAT in the future. Brash said the next step is for businesses to understand how to go about filing their returns while members of the public continue to educate themselves. Under the current legislation, large businesses will begin filing VAT returns in February, while small businesses will begin in April. VAT will be implemented in The Bahamas at a rate of 7.5 percent on January 1, 2015.
Posted on: Tue, 16 Dec 2014 17:56:23 +0000
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