The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Value-Added Tax’s (VAT) implementation will have an impact on small Family Island economies that is ‘three times’ as severe in comparison to New Providence because they lack critical mass, a top private sector executive said yesterday.

Thomas Sands, the Eleuthera Chamber of Commerce’s president, told Tribune Business that many business owners were unsure how the tax would be implemented and what the impact would be for their industry.

“I think it is constructive for all the stakeholders to have discussions and truly understand what is the process, what are changes, how it will be implemented and what’s the likely impact,” said Mr Sands.

“There is great concern over the impact of VAT and what it would mean for a small economy with no critical mass. To date I have heard and read a number of concerns from Nassau businesses, which say that it will be negative on their business in Nassau.

“It will be three times as impactful to businesses in the Family Islands, where we have an additional cost as it relates to shipping, transportation and a very limited market to sell to. If there is a negative impact it would essentially put a nail in the coffin for the Family Islands,” added Mr Sands.

“There is a level of frustration from business owners, who feel that either there is a lack of empathy from the powers that be; they are being overburdened by taxation; or that there is a lack of a strategic plans to assist the Family Islands.”

Assessing the state of the Eleuthera economy, Mr Sands said the recent tourist season was one of the strongest the island had witnessed since the 2008 recession.

“This was driven by visitors to small hotel properties but, even more significantly, by renters of vacation homes. Most of this growth was experienced in areas such as Harbour Island, Spanish Wells and Central Eleuthera,” he added.

“Eleuthera’s attractiveness as a destination has been recently complimented by the opening of the new Cove resort.” But he noted that South Eleuthera remains challenged.

“There still remains a number of infrastructural challenges. Airlift directly from the US has been reduced into Central Eleuthera. In addition to that, rates have increased dramatically on these flights and, of course, this is having a negative impact on hotels and vacation homes going into next season,” said Mr Sands.

“Increased energy costs continue to have a negative impact on business operations here as well. Recent increases in taxes and new fees have also had a negative impact, increasing the cost of living and doing business. Generally, on the real estate side, there has been renewed interest in purchasing real estate in Eleuthera.”