Hon. Mark Brantley and Michael Morton

“Now, in 2010, many of these issues have either deteriorated or remained static. Sectors continue to painfully bear up under the weighty strain of the protracted global financial crisis and our own domestic issues and policies. Together, this mix constitutes a heavy burden, which is more than likely to become even more onerous and challenging with the imminent introduction of VAT on November 1, 2010,” he said at the recently-held Annual Private Sector Banquet.

Morton listed several justifying factors for the private sector’s plea for a delayed VAT, chief of which was the double taxation on existing inventory, and insufficient time for businesses to adjust accounting software.

“Business houses will be required to adjust their accounting software. Some software changes may be extensive and most, if not all, require programming by overseas software providers at tremendous cost. In addition, businesses which have not yet computerized their operations will find it difficult to do so in time for the proposed implementation date,” he said, continuing, “Prior to November 1st most traders would normally have very high stock levels on hand, in preparation for the busy Christmas/Carnival season. These goods would have been imported under the consumption tax regime. There are no appropriate arrangements in place to deal with goods on which consumption tax has already been paid and which would attract VAT upon being sold after November 1st. This is inflationary, as consumers will be required to pay both VAT and consumption tax on the same goods. This will be punitive to consumers and uncompetitive for local business”.

Morton indicated the nation was only informed about VAT in the PM’s March Budget Address, and that he was not aware of any situation in which the VAT was introduced and effected within nine months. According to the CIC head, the experts recommend an implementation period of eighteen months.

Opposition Leader Hon. Mark Brantley expressed similar sentiments about postponing the VAT implementation. During an interview with The Observer, he indicated that the new tax system to be levied at a 17% rate on goods and services would do more harm than good if imposed in November.

“I feel that the government’s decision to impose VAT in November is misguided. The general economic state is not good; the economy had been depressed for some time. Many people are out of work and if you impose a tax on them now on electricity and water and essential services, making them more expensive for these same struggling people, you may have the reverse of the desired effect with people refusing to pay it simply because they can’t afford to,” he said.

Brantley mirrored the CIC’s concern that businesses would be busy readying themselves for the December/Carnival period, a peak sales time, when VAT would be introduced. He suggested a delay until the second quarter of 2011, when the economy would have started to bounce back from the existing recession.

“The Prime Minister continues not to listen, but I think it is a wrong decision to implement VAT at this stage. I understand that the government needs to earn money but if the people who are supposed to pay the tax are not financially in a position to do so, what will happen? The reality of it is if you a single mother of three who doesn’t have a job and is barely holding on, has rent and water and electricity bills and then she has to now pay VAT on top of that – when she can’t pay the bills, they will cut them off, she and her children will be evicted. It has the potential to create social dislocation. … The people are suffering now and VAT can only carry up the cost of living,” he told this media house.

In his feature address at the CIC Banquet, Brantley also told the gathered businessmen that he was not in favor of a VAT at this time and “in this economic climate”.

“The potential hardship will be far too great for the ordinary citizens of this country with the attendant effect of further dampening the economy rather than stimulating it. I therefore sound a note of caution and say to our policymakers that additional taxes now can only hurt an already bad economy. It was no less a man than [U.S.] President Barack Obama who said ‘I will cut taxes – cut taxes – for 95% of all working families, because in an economy like this, the last thing we should do is raise taxes on the middle class’. Let me be clear that additional taxes such as VAT in this current economic climate should be a last resort not a first option,” he said.

Dr. Douglas responded to Brantley’s statements regarding a delayed VAT implementation by saying the Opposition Leader and government’s agenda differed.

“The agenda of the Leader of the Opposition is not the agenda of the people of the country or the government of the country. Some people’s partisan political agenda is not the agenda of the people of this country. We have continued to say to the stakeholders that we believe from all that has happened to date that there is sufficient time given to introduce the VAT and until there is some indication otherwise that it cannot be done, we are continuing to pursue the timetable that had been provided us as guidelines, and as a result of consulting with those who have been accustomed to the introduction of VAT,” Douglas said.

The Prime Minister added that if there was some clear indication that the proposed November implementation date could not be met, then it would simply not be possible. However, Brantley’s opinion alone would not suffice.

“I do not believe that one man getting up and speaking as Leader of the Opposition and articulating what he thinks is an appropriate period because in December people are shopping and people are spending – all kinds of ridiculous reasons – I am saying that that is not sufficient for us to stop the agenda and the program,” he declared.