The Tribune

EDITOR, The Tribune

Countries around the world face the challenge of financing the living standards of their populations while remaining attractive to international consumers of their goods or services.

In the case of The Bahamas, that challenge has always been easy. We attract billions of dollars of foreign investment annually, millions of tourists by sea and air and tens of thousands of foreign residents, all participating in our economy in one way or another.

Against this, we have a tiny resident population relative both to foreign investment (in a bad year, about $2,700 per resident) and to available land mass. It is an enviable position to be in and it explains how we found early national success without radical corrections to an imperfect historical template.

Lynden Pindling clearly understood this, and so (to be fair) did Stafford Sands. Under both their regimes, the idea was to gently extract from the tourist, the investor and the foreign resident in order to maximize opportunities and services for the locals.

Laws and policies in a number of areas reflected this.

As I pointed out in an earlier letter, cruise ships were historically mandated to close down entertainment while in port as a boost to local businesses. The industry attracted few concessions, both because it was deemed less beneficial than the hotel industry and because it clearly did (and does) not need them.

Real Property Taxes were applied only to foreigners in the Family Islands, Bahamians being exempted. This created a natural transfer of wealth from foreign to Bahamian residents in the less developed (but highly sought after) outlying islands.

While maintaining an untaxed but lucrative “offshore” sector, government strictly limited foreign involvement in the ‘domestic’ economy, which was reserved for Bahamians in the professions, retailing and real estate development. Within the domestic economy, tax policy favoured Bahamians.

That basic recipe served us well for decades. Tax receipts grew naturally in line with the growth of tourism and foreign residency in our country, while foreign investment was attracted by abundant advantages of nature and location (advantages that still exist and that still attract), rather than supine concessions. We also grew and maintained a healthy middle class.

Sadly, we are now governed by people with little understanding of things, who are prepared to sacrifice our country’s very strong position in the businesses we are engaged in (primarily tourism) for virtual trinkets and who have morphed the logic of competitiveness into an argument for surrender of the very things that our successes should be geared toward maintaining.

Beginning with Ingraham and accelerating with Minnis, the FNM’s development philosophy fixates on one single aspect of foreign participation in the Bahamian economy: jobs. In this single-minded focus, it has literally opened the floodgates on giveaway tax concessions, swept away hard-won protections and eroded policies that discriminate in favour of Bahamians.

In tax policy, the tendency now is to squeeze the local population with taxes while exempting the foreigner, the investor and the wealthy corporation – often on a vast and astonishing scale.

We got a nasty glimpse of this in 2018 when, amidst outrage over its drastic and unconsulted increase in VAT, the government instantly backed down to a single letter by a Lyford Cay resident demanding no change to the pitifully low rate of Real Property Tax paid by wealthy second homeowners (presumably for the benefit of hiring Filipinos and pricing Bahamians out of land ownership in their country).

That was bad enough. But what few Bahamians realize is that, at this very moment, their “People’s time” government is preparing to begin seizing, advertising and selling properties for non-payment of Real Property Taxes. The catch? This tough new measure is intended for use against Bahamians only.

Firstly, it is to be restricted to New Providence, the only island where Bahamians are not exempted from Real Property Tax at the expense of foreigners.

Secondly, amendments to the Real Property Tax Act have already removed from the Treasurer the power of sale of tax-delinquent property beneficially owned by non-Bahamians only!

In other words, wealthy foreigners (like that chap from Lyford Cay) are deliberately spared the prospect of government seizing and selling their homes should they abuse the privilege of being here by flouting taxes, while ordinary Bahamians are targeted for just such an eventuality.

The Disney Corporation, which reports close to 70 billion dollars in annual revenues and which clearly already makes vast profits in the Bahamas, has just been granted a comprehensive waiver of VAT for allowing us to help them make even more money via the controversial Lighthouse project in Eleuthera.

Executives from both our Ministry of Tourism and Royal Caribbean Cruise Lines are quick to boast that Coco Cay in the Berry Islands is now that company’s number one destination on the planet. Yet neither the government nor the company bothers to explain to the Bahamian people why they nonetheless need vast tax concessions to convince them to keep investing.

Likewise, Minister of Tourism Dionisio D’Aguilar boasts that 2019 saw 7 million tourists (the most ever), yet on the other hand he and his colleagues constantly tell us (the residents of a tourism-driven country) that revenues are challenged. Few seem to note the contradiction.

Signs of the contradiction are visible everywhere. Last week, in George Town, Exuma, I found myself perusing a pile of books under a “take one for free” sign at the exit of Exuma Markets foodstore. They were the remains of the local Library, which has been closed down. A tourist next to me could not understand why a destination so obviously bursting with yachts, foreign residents and general tourist activity could not afford to keep a library open for the children of its small population. Sadly, I myself understood very well, being familiar with the mindset of those who govern us.

All of these foolish policies are pursued in the forlorn hope that they will cause investors to create more jobs. They won’t. They will only cause them to take and keep more of their profits at home. In the meantime, they deform The Bahamas, shrink its middle class and expand the gap between rich and poor.

ANDREW ALLEN

Nassau,

March 15, 2020