The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to clarify whether it will grant Freeport businesses an automatic 20-year extension of their expired tax breaks, amid general acclaim for its pledge to “roll back” the Christie administration’s impositions.

Mick Holding, the Grand Bahama Chamber of Commerce’s president, told Tribune Business that the reaffirmed promise by K P Turnquest, the Deputy Prime Minister, was “excellent news” for the Grand Bahama Port Authority’s (GBPA) 3,500 licensees.

However, he said “a little bit more detail” was required on the new administration’s intentions, and especially whether it planned to place all licensees on a ‘level playing field’ with the GBPA and Hutchison Whampoa.

“I think we need a little bit more detail as to what exactly that means, and whether all licencees will automatically be granted 20 years,” Mr Holding told this newspaper.

“If that’s the case, that’s excellent news. It sounds very promising, but I’m very interested in that fine bit of detail. This doesn’t spell that out.”

Mr Holding was speaking after Mr Turnquest told Tribune Business on Monday that the Dr Hubert Minnis-led administration would eliminate with the requirement that GBPA licensees now apply to the Government for renewal of key tax breaks and incentives.

The newly-appointed Deputy Prime Minister branded this mandate, imposed by the former administration’s Grand Bahama (Port Area) Investment Incentives Act 2016, as “a job killer” because it undermined business and investor confidence by introducing government “subjectivity” into the process.

“It’s very encouraging what’s been said, it’s very positive what’s being said, and it’s very good for the business community, but does that mean 20 years?” Mr Holding reiterated. “Is that effectively what the Deputy Prime Minister means?”

The legislation introduced by the former administration, in a bid to exert greater Government control over Freeport’s governance and investment/taxation affairs, discriminated heavily in favour of the GBPA and Hutchison Whampoa, and their affiliates.

While all the former’s licensees were forced to apply for renewal of their real property tax, capital gains and income tax exemptions, Freeport’s quasi-governmental authority and two largest investors received a ‘blanket’ renewal for 20 years.

Mr Turnquest’s pledge was also hailed by a former GBPA in-house attorney, who slammed the Christie administration’s legislation as the “Disincentive Act’, arguing that it told investors: “You’re better off doing business anywhere other than Freeport.”

Carey Leonard, now an attorney at Callenders & Co, described Mr Turnquest’s comments as “excellent news”, and a potential first step towards providing Freeport’s private sector with much-needed certainty.

“It would give us all time to see where we’re going to go, and talk to the Government,” Mr Leonard said of the application process’s potential end. “I see from looking at the manifesto the new government intends to take a fresh look at the legislation, so we may be able to have some input.

“It cools everyone down, there’s no panic, everybody can think sensibly and hopefully we can come up with something that benefits Grand Bahama. What we needed was a pause, and everybody to think through what will be the consequences. That’s what the Minister is aiming to do.”

Describing Mr Turnquest’s concerns over the application process and wider Act as “absolutely right”, Mr Leonard added: “I call it the Disincentive Act. I absolutely agree with what he’s doing, and it really is a breath of fresh air, quite frankly. It’s giving us time to take a good, sensible look at how we move forward. It gives us all time to take a deep breath.”

The major concerns with the new Act and associated application process involve uncertainty over the length of time for which the tax breaks will be renewed, and the fact this appears left entirely to the discretion of the Investments Board and responsible minister.

There is also the fear that GBPA licensees not planning to expand their business are effectively ‘locked in’ to maintaining their existing employment levels for five years in return for the renewal of their real property tax, capital gains and income tax exemptions.

Should a licensee be forced to downsize in those five years to survive, the Act’s section six, ‘Failure to fulfil obligations’, would appear to come into play.

This allows the minister responsible for investments to strip Freeport businesses, partially or in full, of their tax breaks, and even enables them to demand retroactive payment of taxes that should have been paid if no concessions were granted.

“We have no idea what we need to do to qualify,” Mr Leonard said of GBPA licensee concerns. “There are no criteria. You put in the application and hope somebody gives you them [tax breaks].

“This whole thing about the jobs and employment. I understand they [the former Christie administration] wanted to increase employment, but this is not the way to go about it.

“It’s a way of saying you’re better off doing business anywhere other than Freeport. That’s why I call it the Disincentive Act. It was really a disincentive to doing business in the Port area,” he added.

“There was no certainty in it, and that’s one of the greatest killers for business. You’ve got to have certainty.”

Mr Leonard said that by following through on the Deputy Prime Minister’s pledge, the new government could achieve “small steps that lay the foundation for greater things to come later on”.

“I moved here 19 years ago because I felt Freeport was the future economic engine of the country,” he told Tribune Business. “The potential is still here. It’s just a matter of figuring out how to get all the engines running in the same direction at the same time.”

Dr Minnis yesterday foreshadowed a shake-up in the structure of government, which seemingly includes doing away with the Ministry of Grand Bahama. He instead appointed Kwasi Thompson as minister of state for Grand Bahama within the Prime Minister’s Office.

The change is likely to come as little surprise, given that many had come to view the Ministry of Grand Bahama as merely adding an extra layer of cost and bureaucracy to government.