The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

ABACO’s private sector is scheduled to meet with the Government today to resolve the “number one question” that is the fate of the island’s post-Dorian Special Economic Recovery Zone.

Ken Hutton, the Abaco Chamber of Commerce president, yesterday told Tribune Business that it was “critical to stretch out” the tax breaks and other investment incentives beyond December 31 as increasing numbers of residents and second homeowners began returning to the island following the easing of COVID-19 travel restrictions.

Arguing that Abaco’s reconstruction efforts needed to “get out of the holding pattern” they have been placed in for the past nine months due to the global pandemic, he added that it was “incredibly unfair” that the island’s pleas to re-open schools had seemingly fallen on deaf ears while their counterparts at Old Fort Bay and Windsor had been given the go-ahead on New Providence. “We are supposed to be having a meeting with the minister of finance tomorrow [today],” Mr Hutton disclosed, adding that the Chamber was hoping the Government will agree to extend the VAT and import duty breaks beyond their year-end expiry for appliances, furniture and everything that was needed to fit-out homes and offices.

“We do have a list of things we want to negotiate on, but don’t want to give our position away at this point. I can say in the last five days that we’ve started to see an increase in second homeowners coming back, and the message I’m getting is that is expected to grow and continue in the days to come.”

Mr Hutton described the renewal of the Special Economic Recovery Zones in Abaco and Grand Bahama as “absolutely critical” for reducing rebuilding costs, stimulating construction and other economic activity and providing clarity/certainty for homeowners and businesses as to the rules governing their come back.

“That is probably the number one question that we’re getting,” he added. “What is the status of those concessions and exemptions, and what is happening on December 31. It’s critical. A lot of people are starting to return, and are able to return.

“It’s unrealistic to expect them to get everything in here before December 31. People don’t want to rush spending tens of thousands of dollars getting things before the end of the year. We need to stretch that out and get people back in here for good.

“Abaco has been in a holding pattern since February. We need to get out of this holding pattern and be able to take off. We need the capacity and ability to do that, and we’re hopeful that’s going to happen.”

The Economic Recovery Zones, implemented in late 2019 in Dorian’s aftermath, provide businesses and homeowners in storm-ravaged Abaco and Grand Bahama with a variety of tax breaks and concessions.

VAT, import duty and Excise Tax has been eliminated on construction materials and all other physical goods sold and brought into the zones, while discounts have also been provided on real property tax and other real estate-related taxes provided certain conditions are met.

The Government also removed VAT from construction services, and has already extended the zones’ life once beyond their initial end-June expiry to year-end 2020. And the tax exemptions related to building materials, as well as the elimination of VAT on construction services, do not expire until end-June 2021 to coincide with the close of the fiscal year.

K Peter Turnquest, deputy prime minister and minister of finance, previously told Tribune Business that the only tax breaks expiring at year-end in the zones relate to furniture/appliances and vehicles.

“On those elements I’m fairly comfortable saying the vehicles will not be extended,” he said. “The furniture and furnishings we will have a look at in terms of how we see the building programme for the next six months, and make some determinations about that.”

Reiterating that the zones’ tax breaks were “not intended to be long-term”, Mr Turnquest said of their expiry: “This is one way to tackle the revenue shortfall without increasing taxes.”

The deputy prime minister said the zones, and their tax breaks, were created to enable persons without insurance coverage to rebuild their homes and livelihoods, while also stimulating construction and other economic activities.

Acknowledging that COVID-19 may have impacted the pace of rebuilding, he added that the Government may also have to revisit the tax breaks and other incentives granted if reconstruction had not been stimulated as intended.

Mr Hutton, meanwhile, reiterated Abaco’s plea for its schools to be able to re-open now that COVID-19 lockdowns have been lifted on the island once again. “We have written to the Prime Minister a couple of times,” he added. “I know at least one school that has written asking to be re-opened but they’ve not heard anything back yet.

“We find it incredibly unfair. We find it incredibly unfair when schools in New Providence are being given exemptions. What’s the deal with that? What makes them special, and Abaco schools do not receive a reply.

“The Chamber has written on their behalf, they have written and are getting nowhere, and it’s incredibly unfair. It’s an integral part of getting this place back to some semblance of normalcy.”