The Tribune

By NICO SCAVELLA

Tribune Staff Reporter

nscavella@tribunemedia.net

AN outspoken lawyer has slammed the government’s plan to take court action against delinquent borrowers in order to collect outstanding student loans, accusing the Christie administration of seeking to “make struggling students the scapegoat of its dysfunctional tax regimes”.

Fred Smith, QC, criticised the government for focusing on “suing struggling students” when it is not “being effective in collecting taxes otherwise or is subsidising foreign private profit companies doing business in The Bahamas.”

He said while no one should be allowed to get off “scot free” after borrowing public funds, the government “should really focus on collecting taxes from people who have the money.”

Mr Smith suggested that the government “prioritise” what it seeks to collect first, which he said should be the collection of “half a billion dollars of real property taxes due in the Bahamas” and the “hundreds of millions of taxes which they would otherwise earn in these anchor projects and heads of agreements to foreign developers who don’t need the tax breaks.”

Mr Smith’s statements came after Education Minister Jerome Fitzgerald announced last week that the Education Loan Authority (ELA) is owed $155m in outstanding loan payments for its student loan scheme, principal and interest included.

As a result, Mr Fitzgerald said he has instructed the ELA, which has assumed full responsibility for the loan scheme, to take court action “if and when necessary” to collect the outstanding funds. However, Mr Fitzgerald urged borrowers to arrange payment methods with the ELA to avoid such action.

“Struggling students should not be made to pay at the end of the day when the government is not being effective in collecting taxes otherwise or is subsidising foreign private profit companies doing business in the Bahamas,” Mr Smith said. “I’m not suggesting that people should get away scot free when they borrow money from the government.

“But I am suggesting that the government should prioritise what they seek to collect first, and secondly stop giving away income that they don’t need to, such as these incentives to foreign developers in anchor projects.”

He added: “So my point is don’t make struggling students the scapegoat of dysfunctional tax regimes pursued by the government in failing to collect real property taxes, and secondly giving away concessions unnecessarily to private profit making companies. Get your priorities straight. Young Bahamian students who are just graduating into the workforce should not be hounded for the sins of others.”

According to Mr Fitzgerald, the $155m represents approximately 4,300 outstanding loans, accounting for a delinquency rate of approximately 75 per cent amongst borrowers. Approximately 4,733 loans have been issued to date, he said.

Additionally, of that number, 16 per cent of borrowers are up to date on their payments, eight per cent are up to 270 days outstanding, and 76 per cent are 271 days or more behind on their payments.

However, Mr Smith said the “simple effective remedy to wiping out much of our national debt is the collection of real property tax arrears, not hounding poor students for education loans.”

“And indeed, rather than suing students, more efforts should be made to reach settlements and arrangements for payment which no doubt does occur,” he said. “But suing struggling former students should be a matter of last resort and the government should really focus on collecting taxes from people who have the money.

“Any out of court reasonable arrangement which the Ministry of Education can promote is appropriate, but pursuing them in court is not,” he added. “The government subsidises all kinds of non-statutory initiatives and in particular gives away hundreds of millions of taxes which they would otherwise earn in these anchor projects and heads of agreements to foreign developers who don’t need the tax breaks.

“I am shocked that the government would focus on suing struggling students in order to collect student loans whilst ignoring and basically doing nothing to effectively collect a half a billion dollars of real property taxes due in the Bahamas,” he added.