Insurance customers complain efforts to avoid VAT thwarted
Efforts of consumers who were hoping to get a jump on their insurance premium payments and avoid paying an additional 4.5 percent in value-added tax (VAT) were thwarted this week when government announced they would have to pay the full 12 percent VAT, even if they made payments before July 1.
Chairman of the Consumer Protection Commission (CPC) Philip Beneby told Guardian Business yesterday that his department received multiple complaints over the past week from disgruntled consumers who were being charged 12 percent VAT before the new tax was officially implemented.
“We had a couple persons complaining about the insurance premium,” Beneby said.
“They were trying to pay their premiums ahead of the imposition of the VAT. Let’s say their insurance is due on July 3 or 4, they wanted to pay it now to avoid the 12 percent.”
He said, however, that government published its position with respect to insurance premiums this week explaining that if charges are due in July, the payments must reflect the new tax increase.
Beneby said the position should have been more widely circulated.
“There was a release by the government with respect to their coordination with insurance companies that any particular payments that are due in July and they want to pay it ahead now in June they are subject to 12 percent VAT,” he said.
“So some customers were complaining about that, but government has made a particular position with respect to that. Some of the consumers didn’t feel like that was fair. The release was not widely distributed and there should have been some additional views put forward in the media for things like that. So some of the customers feel disadvantaged from that point of view.”
Government has increased VAT from 7.5 percent to 12 percent on all forms of insurance, excluding residential owner-occupied home insurance, which became zero rated following a plea from the Bahamas Insurance Association (BIA).
BIA Chairman Emmanuel Komolafe has said the effects of the increase in VAT on the industry could cause a decrease in private healthcare insurance, resulting in further strain on the public healthcare system.