The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian hotels have been running afoul of the Government’s Excise Stamp law for tobacco products, resulting in goods “of significant value” being confiscated.

Stuart Bowe, the Bahamas Hotel and Tourism Association’s president, confirmed to Tribune Business that resorts in the Family Islands, in particular, had been found non-compliant during government inspection/enforcement efforts.

The Excise Stamp (Tobacco Products) Control Act requires such stamps to be affixed to all tobacco-related products as proof that due taxes to the Government have been paid.

Mr Bowe and the BHTA, in e-mails both sent to, and obtained, by Tribune Business suggested that some hotels, especially in the Family Islands, are contravening the law simply through lack of knowledge and ignorance.

The BHTA, in a November 3 e-mail seen by this newspaper, warned its members: “We have recently received communications from a number of BHTA members, particularly in our Family Islands, who have indicated they have been visited by representatives from the Ministry of Finance and Bahamas Customs for the purpose of conducting inspections to ‘ensure the full enforcement of the Bahamas Excise Tax/fees on all Excise Products in the Bahamas.”

The BHTA said it had been provided with documents relating to the Government’s Excise Stamp enforcement efforts by a BHTA member, who received them “upon the commencement of a site inspection, which resulted in product of significant value, being confiscated”.

The e-mail added: “We will be communicating with the Ministry of Finance and the Customs Department to garner, and subsequently distribute to members, any further relevant information so our members can be informed for compliance purposes, and to prevent businesses from being subject to costly fines/confiscation without their knowledge of the law.”

Responding to Tribune Business questions on the matter, Mr Bowe did not identify any of the impacted hotels, or state how many there were.

He merely said: “The BHTA has received reports from impacted businesses from specific locations in the Family Islands.

“The Ministry of Finance’s notice indicates the undertaking is geared towards the “full enforcement of the Excise Tax/fee on all Excise products in the Bahamas”.

Asked how concerned the BHTA was over the situation, given that some hotel properties have had product confiscated and could be exposed to fines and other sanctions, Mr Bowe said: “The BHTA has offered their assistance to the Ministry of Finance, Bahamas Customs and other relevant Government agencies, to act as a liaison and conduit of information between the Ministry and members of the Bahamas Hotel and Tourism Association (BHTA), in an effort to ensure that businesses are adequately informed about any law governing the Commonwealth of the Bahamas.

“The timely dissemination of information through organisations such as the BHTA can boost compliance and mitigate the impact on businesses, which may come in the form of costly fines and confiscations of goods.”

The Government believes the Excise Stamps are a key tool in combating tax evasion and smuggling related to tobacco products, which it believes was costing the Public Treasury up to $20 million annually.

The Stamps have to be affixed to all forms of tobacco - cigarettes, cigars, tobacco sticks, pipe tobacco, chewing tobacco and snuff, plus raw leaf and any waste tobacco left over by Bahamas-based manufacturers.

The initiative experienced a rocky start, with local distributors such as Bristol Cellars, temporarily asked to withhold product from the market due to concerns over glue quality and whether the Excise Stamps were properly affixed.

This, though, was eventually overcome, and the Government subsequently indicated it was assessing whether to expand the Excise Stamps to other high revenue-yielding products that were vulnerable to smuggling, such as alcohol.

Still, it appears that some businesses, including the Bahamas’ largest private sector industry, have yet to come into full compliance by ensuring that all products for sale display the Excise Stamps.

John Rolle, the Ministry of Finance’s financial secretary, confirmed in a June 12, 2014, open letter that the Government was ramping up its Excise Stamp enforcement efforts.

‘To this end, on-site inspections are being conducted, with the view that all businesses/persons that are in the business of selling these Excise products are complying with all the laws and regulations regarding the above matter,” Mr Rolle wrote.

“We ask that full assistance and co-operation be given to the Excise Officer/s conducting this site visit/inspection of your premises/establishment.

“The main objective of this site visit is to assist your establishment in becoming regularised and ensuring that you only purchase products with the Excise Stamp affixed on them, and from those businesses who are registrants with the Ministry of Finance.”

In accompanying literature handed out to businesses, the Ministry of Finance says the Excise Stamps are designed to “protect consumers and the national revenue”.

It adds that the Stamps “must be affixed to the packaging of tobacco products to show Excise Officers and honest purchasers of tobacco products that such products conform to the laws of the land.

“That is, the products are not contraband or counterfeit, and related taxes and fees have been paid.”

Penalties for breaching the Act range “from $1,000 to tens of thousands of dollars and/or jail time”.