The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Tax cheats and fraudsters were yesterday warned that the government’s revenue authorities will be “stepping up surveillance” to protect the post-Dorian Economic Recovery Zones from abuse.

K Peter Turnquest, deputy prime minister, in tabling the order to bring these zones into effect, emphasised the government’s determination that their multiple tax breaks will not become a “universal tax holiday” or “free for all” to be exploited by persons and businesses not impacted by the disaster.

“We understand that as much as we try to be progressive there are those that take advantage of the system,” he told the House of Assembly, adding that the government could simply not afford for the zones in Abaco and Grand Bahama to become major revenue leakage sources given Dorian’s estimated $3.4bn impact.

He added that the revenue foregone by establishing these zones, which will remain in effect until end-June 2020, is “significant” and will add to the Government’s growing fiscal burden. Dorian is projected to increase the Government’s total spending by $302.6m, and lower its revenues by $236m, during the present 2019-2020 fiscal year alone, resulting in a $677.5m deficit and $508m in extra borrowing.

“The Government’s priority in the delivery of these tax breaks is the people in Grand Bahama, Abaco and the surrounding cays of both islands,” Mr Turnquest said. “We will, and we must, have sufficient controls in place to prevent abuse, and we will apply the full weight of the law against those who take advantage of the system to the determent of those actually in need.

“This is not a universal tax holiday and it is not a free for all.... The Department of Inland Revenue and Customs will be stepping up surveillance activities at all domestic ports to ensure there is no attempt to import or use these economic recovery zones to transfer goods out for the benefit of people outside these zones.

“A word to the wise to those who will try to beat the system. You will be detected and prosecuted to the full weight of the law. The cost of this programme is significant. The economic loss to the country is significant, expenditure is increased as a result of this disaster, and we cannot allow for any leakage of revenue without some checks and controls in the way of those who may try to test the system.”

Mr Turnquest said the Government had no plans to establish a “bonded warehouse” on New Providence so that non-governmental organisations (NGOs) can store supplies there tax-free before moving them to Abaco and/or Grand Bahama.

Responding to a question from Opposition leader, Chester Cooper, who suggested that NGO’s needed such a secure facility given their absence on the Dorian-hit islands. “We will look at it to see if it can be a safely monitored and managed situation,” Mr Turnquest added.

“We are very concerned that if we start to allow that operation, opportunities for leakage will arise. It may not be something we want to encourage. We will look at it understanding the security challenges. It puts an added burden on Customs to surveil and monitor this inventory to ensure it’s being delivered to the affected islands, rather than being delivered to New Providence and other parts of the country that are not intended to benefit from these incentives.”

Services will not be eligible for tax breaks in the economic recovery zones.