The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to double the $250m it plans to invest in small businesses over the next five years by removing restrictions on foreign participation in these entities.

Mark A Turnquest, a prominent small business consultant, told Tribune Business that $100m per year, rather than the $50m proposed by the Government, was essential if there was to be a lasting impact for both existing and new entrepreneurs post-COVID-19.

Responding after the Prime Minister yesterday confirmed the Government's acceptance of the $250m proposal by its Economic Recovery Committee, he said: "The small business owners are in dire need, but they really need $100m. You won't get that unless you have foreign investors and crowdfunding involved.

"What the Government should do is really relax restrictions on international investment in small business opportunities in The Bahamas and encourage crowdfunding type mechanisms. They're going to max out that $50m very fast because a lot of businesses are really hurting, and to get new entrepreneurs in the marketplace is another thing.

"To get the creative industries, technology and agriculture going will need more money than that. My recommendation is $100m a year. Fifty million dollars from the Government matched with $50m from international investors and crowdfunding to make it doable." The $50m per year proposed by the Economic Recovery Committee is close to matching the $55m provided by the Government for this fiscal year.

Mr Turnquest, meanwhile, urged the Central Bank to relax exchange control restrictions on foreign investment in small and medium-sized enterprises (SMEs) as a means to allow the free flow of capital following the release of the Committee's report yesterday.

"Increase access to capital for Bahamians," it urged. "The Government should invest a minimum of $50m per year to support small business development and expansion, and expand micro grants and micro loans for small scale Bahamian entrepreneurs and tradespersons.

"Special funding envelops should be set aside for disadvantaged or marginalised segments of the population, such as persons below or near the poverty line; Bahamian youth and Family Island communities."

Perhaps more controversially, at least in some quarters, the Committee's report also proposes increasing the fees for economic permanent residency permits but offsetting the impact by "a stipulation/guaranteed processing time of 90 days from the date of submission of a completed application".

And, besides increasing then present $60,000 real property tax ceiling, the Committee also recommends levying this tax on "high end" Bahamian-owned properties in the Family Islands - an exemption that has been by some as a "big carve out".

"Expand the reach of real property tax by increasing the tax ceiling on high-end properties, introducing real property tax to higher end Bahamian properties on the Family Islands with funding of the same to support Family Island councils in those islands," the Committee urged.

Neither suggestion is likely to please realtors and associated industries, but the Committee is likely to find some support for recommending that Business Licence fees be based on 'gross profit' rather than revenue or turnover.

"The Bahamas’ historically regressive tax regime is viewed largely as both inequitable and unsustainable," the report conceded. "Tax contributions are disproportionately higher for lower income citizens/businesses largely because of the regressive nature of the country’s tax regime.

"Beyond this, the sustainability of the current regime in light of population growth, the rising cost of living and other factors remains an impediment to its growth and development prospects."