The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

TAX concessions when used properly should be an inducement to encourage private sector investment, Prime Minister Perry Christie said yesterday, noting the extended Hawksbill Creek Agreement (HCA) concessions will encourage and facilitate further development and employment on Grand Bahama.

Addressing Parliament yesterday before tabling the Grand Bahama (Port Area) Investment Incentives Bill, 2016, Mr Christie said that the Government is “desirous of encouraging and facilitating economic growth and continued development of all sectors of the island of Grand Bahama, and of promoting increased opportunity for significant employment for the overall economic benefit of the Bahamas.

“It is envisaged that the MOU and agreements to be made with licensees will aim to fundamentally shift the investment climate and economic prospects in Grand Bahama in a dynamic and positive way for all concerned. We have sought to create a new economic development framework that can jumpstart and sustain growth in Grand Bahama. A framework is to be established for the Government and private sector to partner to deliver a wide range of gains for the residents of Grand Bahama and the Bahamas as a whole,” said Mr Christie.

The Prime Minister noted that specific objectives will emerge from the framework including immediate investments in strategically important industries; historic changes in the governance, transparency and regulatory framework that governs Freeport; Government ownership stakes in prime landholding companies which will allow for enhanced public/private development and partnerships, and a new framework for performance-based development concessions that will replace the expiring tax concessions of the HCA, among other objectives.

“Underpinning these agreements for change and new investments is a new approach to development concessions in Grand Bahama,” he said. “The expiring tax concessions as initially provided under the Hawksbill Creek Agreement, and extended on multiple occasions, were designed in a different era and need to be updated. Tax concessions, when used properly, should be an inducement to encourage private sector investment and/or employment. Accordingly, we will be establishing a new framework that will replace and modernise the current framework for tax concessions in Freeport.”

He added: “A new regime with a new framework is contemplated for the Port area with respect to the tax concessions which expired on May 4, 2016. The same tax concessions will be granted by the Government for a period of 20 years commencing on May 4, 2016, to existing licensees of the GBPA on an individual basis, subject to certain conditions and under a framework that would provide for the maintaining of performance through periodic reviews every five years. The Government would collaborate with GBPA on the design of the framework. The same framework will apply to new licensees once they submit and obtain approval of their development plans.”

Mr Christie noted that the government is also taking steps to address an important inhibitor to development in Grand Bahama - the lack of any taxes or carrying costs of undeveloped land. This, he noted, means that property holders can simply sit on undeveloped land without recourse. “To address this situation, and enhance the revenue base in Freeport, we intend to create a new framework where real property tax would be payable on undeveloped land held by non Bahamians owning more than five acres,” said Mr Christie.