The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known QC has blasted the Grand Bahama Port Authority’s (GBPA) “abysmal failure” to protect the rights of its 3,500 business licensees, calling on them to “unite” and sue Freeport’s quasi-governmental authority.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the GBPA seemed to be “indifferent” to the Government’s constant attempts to undermine the Hawksbill Creek Agreement, and the licensee rights enshrined in it, through imposing new taxes on Freeport.

Mr Smith, who is also a partner in the Bahamian Brewery & Beverage Company, said the Government’s desire to suddenly increase the firm’s tax burden by 75 per cent on domestic beer sales outside Freeport “epitomises” its approach to the country’s second city.

“And, worse still, the abysmal failure of the Port Authority in protecting the rights of licensees,” Mr Smith told Tribune Business.

“The Port Authority, no matter what taxes are imposes on licensees by government, collects millions of dollars through its own licence fees and service charges, as people’s property will be taken if they don’t pay.

“It seems a matter of indifference to the Port Authority as to whether their licensees’ rights are upheld, and that’s why I encourage licensees to unite and sue the Port Authority and sue the Government.”

Mr Smith added: “It is time the licensees are recognised as a block, and sue to be recognised.

“If the licensees would get come cojoines, I would encourage them to stop paying licence fees, stop paying service charges, put them into court in an escrow account, and keep suing the Port Authority for breach of their rights.

“Hit the Government and the Port Authority in the pocket, where it counts.”

Mr Smith’s comments come amid intense discussions as to whether GBPA licensees, via the Grand Bahama Chamber of Commerce, should mount a Judicial Review-type ‘class action lawsuit’ to challenge the new and increased taxes imposed on them in the 2013-2014 Budget.

Many observers believe these violate the Hawksbill Creek Agreement, and this was followed by Tribune Business’s reports last week about the Government’s desire to slash the ‘tax spread’ advantage that the Bahamian Brewery & Beverage Company holds over its BISX-listed rival, Commonwealth Brewery, by 50 per cent.

Mr Smith said the Brewery had been “assured” by the Government, through Bahamas Customs, that it would enjoy a $3 ‘tax differential’ advantage over its larger rival prior to opening.

Now, with the Christie administration seemingly looking to reverse this position, Mr Smith said the omens for a successful renegotiation of Freeport’s Business Licence and real property tax exemptions - which expire in 2015 - do not look good.

“What it evinces is a negative and dismaying approach to promoting Freeport as a tax free zone of private industry,” the QC told Tribune Business.

“This really doesn’t look good for those benefits that expire in 2015, and neither does it look good for anybody promoting business.”

Despite being classed as a ‘tax free economy’, Mr Smith said that while contributing between 25-30 per cent of the Bahamas’ annual gross domestic product (GDP), Freeport still produced between $150-$200 million in revenues for the central government via Stamp Duty, duties on consumable stores, National Insurance Board (NIB) contributions and Immigration fees.

But, given the latest government actions, Mr Smith said: “Businesses may as well give up the ghost and leave Freeport.

“I, for one, will not invest further in Freeport, and I will not encourage anyone else - local or foreign - to invest.

“My company, Callenders, closed down its corporate, commercial and banking business years ago, and reduced our staff from a high of 57 down to 13. Like most law firms in Freeport, we now operate with a skeleton crew.

“You can’t extract blood from a stone. That’s what the tax bureaucrats in Nassau have to understand. Freeport is not here just to be squeezed,” Mr Smith added.

“Taking into account the Port Authority licence fees, the service charges, the duty on consumables, the tax on beer manufacturing, the cost of doing business in Freeport is more than in Nassau, even though we are supposed to be tax free.”