The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FNM’s deputy leader has slammed as an insult to “burdened” Bahamian families the Government’s suggestion that the Value-Added Tax (VAT) foregone on Baha Mar’s construction completion is “really miniscule”.

K P Turnquest described efforts by Jerome Fitzgerald, minister of education, science and technology, to downplay the revenue relinquished by the Government as “an unfortunate choice of words”.

Reacting to Mr Fitzgerald’s suggestion that the ‘VAT exemption’ for Baha Mar’s construction completion was a ‘trade-off’ for securing the $100 million payout to the project’s creditors and former employees by the China Export-Import Bank, Mr Turnquest said: “$100 million is certainly not miniscule to anybody.

“And $1 million is not miniscule to most Bahamian families. All those Bahamian families saddled with VAT don’t think it’s miniscule. It’s an unfortunate choice of words.”

Tribune Business’s revelation that the VAT ‘exemption’ has been extended to the project’s sub-contractors and suppliers, not just China Construction America (CCA), has reignited a vigorous debate over the Government’s handling of the Baha Mar situation, and the type and value of investment incentives it should have granted.

One side believes the VAT incentive, and other tax ‘break’ concessions, were necessary to induce the China Export-Import Bank to both finance Baha Mar’s construction completion and take care of creditor liabilities that were not its obligation.

Stephen Wrinkle, the ex-Bahamian Contractors Association (BCA) president, said last week that the Government, and entire Bahamas, were in a weak position where they had no choice but to complete Baha Mar whatever the cost.

And the Christie administration’s oft-stated position has been that the employment of thousands of Bahamians, and other spin-offs from an operational Baha Mar, will generate economic benefits - including tax revenues - that far outweigh the initial taxes foregone.

However, with neither the Heads of Agreement with Baha Mar’s purchaser, Chow Tai Fook Enterprises (CTFE), nor the construction completion deal with China Export-Import Bank, disclosed (the latter is sealed by Supreme Court Order), an ‘information vacuum’ has been allowed to develop.

This has allowed speculation to rum rampant, and the Opposition political parties to attack the Government for lack of transparency and ‘giving away’ too much in a ‘bad deal’.

This, combined with the lack of trust many Bahamians have in this government and the Chinese, has created a potent, toxic combination where much of society distrusts what has been done.

The VAT issue is particularly galling and emotional for Bahamian consumers and businesses, who have been religiously paying the 7.5 per cent levy and dealing with higher living costs, only to see a foreign-owned entity be given a blanket exemption.

Mr Fitzgerald, in justifying the VAT incentive, said:” “At the end of the day, the trade off was $100 million which we got in order to settle on the employees, all the Bahamian contractors and creditors, and also to secure leases for the Bahamians who had spent millions of dollars inside the resort.” Some of these leaseholders, it has been divulged previously, are related to Cabinet Ministers.

Mr Fitzgerald, a member of the Government’s Baha Mar committee, made his comments to ZNS outside a special Cabinet meeting, which was called to discuss public revelations about the Baha Mar ‘VAT exemption’.

“I’m surprised that they took such drastic action, having this Cabinet meeting and statement in response,” Mr Turnquest told Tribune Business.

“It was interesting that he [Mr Fitzgerald] actually admitted it was the taxpayers who paid off, in an indirect way, the China Export-Import Bank.

“The thing about the bank making ex-gratia payments was very telling, and the end result is that the Bahamian people effectively made this payment themselves and are left holding the bag with respect to the whole situation.”

Mr Turnquest also called on Mr Fitzgerald for himself and the Government to disclose the Baha Mar agreement, the minister having last week pledged to “ put it on the table as quickly as possible”.

Mr Fitzgerald said then: “It’s been a good deal for the Bahamian people, there was no give away. At the end of the day I think once those facts are (out), I think the Bahamian people will be satisfied we made an excellent deal on behalf of the Bahamian people.”

The FNM deputy leader, though, queried whether Mr Fitzgerald was “being a bit disingenuous” in his desire to release the details, as nothing had been heard of the Government petitioning the Supreme Court for the construction completion agreement’s ‘un-sealing’.

“We share his desire for this agreement to be released, and hope he will use his position and influence to make it happen as quickly as possible,” Mr Turnquest said of Mr Fitzgerald.

“The Government ought to come to the Bahamian people with what has been negotiated on their behalf. To the extent the tax concessions are less than the benefits to be derived from the project, they ought to be able to demonstrate that to the Bahamian people not only in words but in numbers.”

The FNM deputy leader continued: “As the minister says, to avoid all the speculation, I think they ought to go out there and lay the documents.

“His statement said a lot of words but no substance, and in terms of credibility they lost that a long time ago, so it’s time to prove.”