After being so adamant that a new general services tax would be implemented by next April, it seems strange that it appears the Finance Minister has apparently now backed down.
Appearing on the Shirley Dill show yesterday, I am told that he all but ruled out the GST which was going to be implemented in order to raise in the region of $50.
It had the backing of the Chamber of Commerce president, John Wight, and I had detected no large-scale opposition to the idea.
This is what Finance Minister ET Bob Richards said at the last Budget: “Mr. Speaker, in order to broaden the tax base, a new services sales tax, to be called the General Services Tax [GST], will be levied on turnover from the provision of most services by service providers to the public.
“It is proposed that this GST will be levied at a rate of 5%.
“As this is a change that will require significant adjustments in operations, billing, and reporting on the part of service providers and collecting, tracking and enforcement on behalf of Government, this tax will not be implemented until April 1st 2017 at the earliest.
The move raises some interesting questions:
- Was the timescale too ambitious in the sense that it would have been impossible to put the necessary administrative systems into place by April 1?
- Was there a big blowback to this during the consultation stage?
- Was there a realization that any tax like this – administered across the board at 5 percent – would actually be inequitable?
- How will the Finance Minister raise the $50m?
Of course, a cynic would also suggest that as 2017 is an election year, anything that adds another burden to business would go down like the proverbial lead balloon.
Of course, we still have the on-going review of Bermuda’s tax system and we’ve no idea what to expect from that, but this does at best seem like poor planning and at worst a significant – and embarrassing – climb down.