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Batting for VAT


Shawn Cumberbatch

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The man who spearheaded the controversial implementation of value added tax (VAT) more than 17 years ago has defended the levy as “the Rolls-Royce” of taxes and dismissed “lingering doubts” about its “appropriateness”.
Breaking his silence in the wake of contention sparked by recent criticism of the tax by Central Bank Governor Dr DeLisle Worrell, Merton C. Moore, who was head of the VAT Implementation Unit and director of VAT between January 1997 and January 2000, referred to “certain misconceptions being articulated by usually well informed persons”.
Moore, in an analysis entitled A VAT For Barbados, said: “The value added tax is a comprehensive broad-based indirect tax on goods and services with the potential to provide adequate revenue for the Government while offering the business sector room to see inflows of income over periods in a usable manner before onward passage to Government.
“While I do not profess to be an expert on tax systems internationally, it is my considered opinion that as a member of the fleet of indirect taxes I have had the honour to administer at any level over three decades, the VAT is the Rolls-Royce of taxes. Treat it with intelligence, integrity, care and respect and it is likely to reciprocate.”
Moore used the term “comprehensive” to describe the tax because, in his view, it “takes into account” several important factors. These included “the poor with low levels of income; the need to assist certain industries such as agriculture; the futility in taxing some services like medical services and domestic accomodation; the need to assist certain interest groups or classes – thus the reverse tax credit and the basket of goods; the need to offer registrants time to account for transactions among others; and the need to render exports more competitive”.
At his first quarter Press conference last month, Worrell called VAT “a mess”, “controversial”, and “inappropriate” for Barbados, recommending its replacement by “a simple sales tax”. The governor’s comments drew immediate criticism from former Prime Minister Owen Arthur, whose administration introduced it in January 1997, and economist Professor Michael Howard.
Moore, who said his experience with indirect tax started in 1966 when he entered the Civil Service in the Customs & Excise Department and worked for 34 years, regretted that “some persons remain implacably opposed to [VAT] and are not prepared to allow it a place in an imperfect world of imperfect peoples and systems”.
He pointed out that “over the last 50 years the popularity of the VAT has soared to the extent that more than 120 countries have adopted and adapted the system”, but added that “enforcement of indirect tax has always been a difficult task and calls for diligence, imagination, strong and positive action”.

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