The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A top dive operator yesterday feared it might have reached “a tipping point” after being forced to raise its prices 10 per cent, as it warned of “civil unrest” over the increasing number of foreign boats exploiting Bahamian waters.

Stuart Cove, head of Stuart Cove’s Dive Bahamas, told Tribune Business that the number of foreign “liveaboard” dive vessels suspected of operating in this nation illegally was becoming “outrageous”.

While his company, and other Bahamian operators, incurred higher overheads and paid numerous taxes/fees, Mr Cove said foreign operators were contributing virtually nothing to the Bahamian economy and evading due taxes.

Suggesting that several Bahamas-based resorts were acting as a base for these foreign operators, and facilitating bookings for them, Mr Cove said they were squeezing legitimate Bahamian companies out of business.

Noting that his Business Licence fee alone had increased by 75 per cent year-over-year, the Stuart Cove’s Dive Bahamas principal said increasing costs had left him with no choice but to raise prices - making him potentially even more uncompetitive against cheaper foreign operations.

“Here we are, our Business Licence tax bill has gone from $80,000 to $140,000,” Mr Cove told Tribune Business. “We had to sell an asset this year to cover payroll, and we’re just at the point where we had to raise prices to stay in business.

“We are the most expensive dive destination in the region, and this could be the tipping point for us if these prices are not accepted and we have to downsize.”

He added: “It’s like a slap in the face. They’re raising my taxes, which I’m paying. I have no problem paying my taxes, but let’s make it fair.

“It’s just going to drive more people to the illegals. We’ve raised our prices 10 per cent across the board today, and with 15 per cent VAT on the horizon, it’s crazy.”

Stuart Cove’s Dive Bahamas employs 150 persons, and Mr Cove pointed to the irony of having to increase his prices “to cover taxes” while illegal, foreign competitors took increasing market share.

“The Government does not have the fortitude, the balls to tax these boats running operations in the Bahamas,” he told Tribune Business. “We’ve sent them all the information, met with the Minister, and I’ve had enough.

“There’s going to be civil unrest. I’m going to chop the anchors [of these foreign boats] or 150 people will be out of work.

“These fellas in Bimini are so angry, there’s going to be civil unrest. They have the means to go out there, cut their anchors, cut their ropes. That’s not a threat; that’s a promise. Government needs to act now.

“Successive governments have allowed this to happen, and it doesn’t seem like anyone has the balls to do anything about it. Politicians are ballsless people. People are hurting.”

Mr Cove said he would “do whatever it takes” to keep his staff employed and thereby provide for their families.

He meanwhile described the situation in Bimini as “outrageous”, having spent several weeks on the island running ‘shark chasing’ tours.

Three-four Bahamian operators on the island, Mr Cove added, were having to compete with six foreign boats all thought to be unlicensed and enjoying lowering operating costs, a situation he described as “ridiculous”.

Mr Cove’s wife, Michelle, said Bimini appeared to be a “hot bed” for foreign ‘liveaboard’ dive operations to establish operations on land.

“They stock up at CostCo in the US, don’t pay a thing in the islands, have all foreign staff, use all our resources and leave,” she told Tribune Business.

Mrs Cove said the dive industry was, like the food retail and auto industries, “high gross revenues, low yield” on profit margin.

“I’m trying to figure out how we’re going to make it with VAT,” she said. “We developed a package, diving with all the add-ons, and still can’t compete with them [foreign operators] as their prices are so low. They don’t have any taxes.”

Mr Cove had last year told Tribune Business that if foreign operators were taxed on the same basis as their Bahamas-based counterparts, the Government would likely quadruple its annual tax take to $4 million.

Linking VAT’s impending implementation to the absence of an existing ‘level playing field’ in the dive industry, Mr Cove said the problems stemmed from the Foreign Charter Yacht Act (1991 Boat Registration Act, Chapter 277).

This had been designed to attract mega yachts to base themselves in the Bahamas and run charters from this nation, developing a lucrative new market for this nation.

The Act was designed to offer a more attractive tax regime than Florida, levying a 4 per cent ‘Charter fee’ on these boats gross revenues, in comparison to a 6 per cent sales tax, plus an annual licence fee linked to vessel size.

But Mr Cove said this had created “a loophole for all dive boats out of Florida to be quasi-legal”, with many avoiding the 4 per cent of gross revenues charter fee.

While some of these boats were based in the Bahamas, most were based in West Palm Beach, Fort Lauderdale and Miami, and frequently cruised Bahamian waters, taking advantage of this nation’s natural resources, without paying a cent in taxes to the Government.

Tribune Business is not naming any of the hotels, or any of the five Nassau-based ‘liveaboards’ and two Bimini operations identified by the Coves, as they did not respond to this newspaper’s calls seeking comment.

However, Mrs Cove wrote in an e-mail: “Can’t someone in Government enforce the law and shut these people down? Why do Bahamians have to duty pay their boats, equipment, hire Bahamians or pay $4,000 for work permits if you can just bring a foreign self-contained dive boat with a foreign crew to the Bahamas and be in business?

“The ‘liveaboard’ issue needs to be exposed. There are tons of ‘liveaboard’ dive boats operating off Bimini and Grand Bahama, as they are in such close proximity to these islands. Many are not registering properly. When they set up shop on land and there is such a flagrant disregard for our laws, something must be done.”

Mr Cove added: “There are also tons of ‘liveaboards’ operating out of Nassau. Nassau is hit hard.”