The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has been urged to prioritise energy reform over its Constitutional Bill, a top private sector executive describing it as “the only big ticket item” capable of offsetting Value-Added Tax’s (VAT) cost of living increases.

Robert Myers, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said that while necessary, the proposed constitutional reforms would not provide Bahamians with “relief” when it came to the more pressing issue of disposable income cuts.

Acknowledging that the Constitutional Bills were among the Government’s legislative priorities, Mr Myers told Tribune Business: “I’m sure someone is going to shoot me for this, but put that to the back of all the other issues.

“It’s [constitutional reform] not that important, but I only say that because the relief energy reform will provide will be more beneficial to people’s ability to lead a comfortable.

“It’s the only relief mechanism of significance out there in this whole fiscal and tax package.”

Deputy Prime Minister Philip Davis this week promised that the Government will take a decision on the Bahamas Electricity Corporation (BEC) restructuring process, and who the preferred bidder(s) might be, by August 31.

That process, begun almost a year ago, envisaged splitting BEC into a two entities - separate power generation and transmission and distribution arms. Five bidders remain in the running.

A whole host of issues are bound up in the BEC reform process, including the provision of consistent, reliable energy at costs likely 30 per cent or more below current prices. Debt and the environment are other key areas to be addressed.

Mr Myers and the BCCEC view energy reform, and the prospect of reduced power costs, as a key economic stimulus that may help to get the private sector moving and create more jobs. At the very least, they see it as countering the ‘living standards impact’ from 7.5 per cent VAT’s introduction on January 1, 2015.

Yet the delayed BEC process has also impacted the Bahamas’ efforts to embrace alternative, renewable energies, as the Government’s policy is to avoid taking any decisions in this area (Stellar Waste-to-Energy Bahamas excepted, or maybe not) until the Corporation is sorted out.

Again prodding the Government to get a move on, Mr Myers told Tribune Business: “Energy reform is going to have a significant impact on disposable income.

“You have to provide society with some relief on these increases in costs. Energy is the only big ticket item that is going to provide relief for the citizen, the Government and the business sector.”

The BCCEC chairman called for energy reform to take place “simultaneously” with the Government’s current legislative agenda, which is focused on VAT, gaming reform (webshops) and the constitutional Bills.

Prime Minister Perry Christie said recently his administration would turn its attention to the energy sector once it was finished with these three priorities, but Mr Myers added: “They’ve got to understand the concerns I have, and the concerns the Chamber has.

“We’ve got to do something about energy. Constitutional reform is not going to give us any relief on taxes or any increase in disposable income.

“The concern I have is constitutional reform is not going to have an impact on people’s disposable income. VAT is going to have a significant impact on disposable income. The Gaming Bills are going to have an impact on government revenues, and I understand that’s their priority to get done.

“But energy reform provides the citizen, the Government and the business community much more relief from these rising costs.”

The belief of Mr Myers, and others, is that a reduction in electricity bills will free up more disposable income for Bahamian consumers. The theory is that this will offset VAT’s impact, and prevent any sudden drop in aggregate demand - a vital indicator in an economy that studies have shown is almost two-thirds driven by consumer spending.

And businesses should have more capital and cash flow freed up for expansion and investment, resulting in job creation.

Mr Myers, meanwhile, again warned that he and the private sector would not pay VAT until the webshops were legalised, regulated and taxed.

“You are going to have significant push back if that is not regulated, and those people are not paying their share of taxes,” he said of webshops.