The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The high-end Albany project received more than $23m in tax breaks during the 2017-2018 fiscal year as the government’s financial watchdog called for a “cost benefit analysis” on all such exemptions.

The Auditor General’s Office, in its audit of the government’s finances for that financial year, revealed that the south-west New Providence development received the third-largest customs duty and excise tax exemption as its incentive agreements enabled it to pay zero of what would normally have been due.

Albany, which caters to homeowners who are mostly high net worth millionaires and billionaires, was also shown to have “deferred” $29.498m in VAT, paying just $401,000 to the Public Treasury that fiscal year. The “deferral” does not mean that the $29.498m will not be paid; just that it has been delayed until the start of economic activity associated with this sum - something Baha Mar also enjoyed.

Nevertheless, the data and comments by the Auditor General’s Office will likely reignite debate about the extent and value of tax breaks/investment incentives that the Government grants to wealthy foreign developers especially at a time when the Government needs every cent it can get following the debt blow-out produced by Hurricane Dorian and COVID-19.

Albany has investors, including Lyford Cay-based billionaire Joe Lewis’ Tavistock Group, and world-renowned golfers Tiger Woods and Ernie Els, who are seen as having exceptionally deep pockets in addition to the wealth amassed by their homeowner clients.

Yet the Auditor General’s Office revealed that Albany received the third-largest Customs duty and Excise tax exemption that year behind Bahamas Power & Light (BPL), which enjoyed $216.77m worth of tax breaks on its fuel imports, and the $76.14m in exemptions granted under the Hotels Encouragement Act.

“The Albany project exemptions accounted for $23.05m or 6 percent of the $329.69m” in total duty and Excise tax revenues foregone in fiscal year 2017-2018 due to the Government’s incentive legislation and agreements with individual investors,” the Auditor General’s Office said.

Of $358.25m in VAT-able activity that was subject to these investment incentives, some $123.73m was collected with another $236.22m “deferred” and $389.93m “foregone” by the Government and Public Treasury.

“We noted that the $389.93m in revenue ‘foregone’ accounted for 52 percent of the $750.94m that would have been recognised except for the concessions and exemptions,” the report said of VAT.

“From the total $392.26m duty and Excise taxes levied, $2.75m revenue was collected and $389.94m exempted through concessions. The concessions have a direct impact, in the first instance, of reduction in the Government’s Customs revenue for duty and Excise taxes.....

“Notably, the $389.94m ‘foregone revenue’ impacts the overall recurrent revenue. A cost-benefit analysis is deemed appropriate in concessions, duty and taxes management with respect to the projects, investments, industries and policy governing the benefits to be derived,” the Auditor General’s Office continued.

“Big data analysis across the trade sectors to undergird the results would be beneficial for transparency, accountability and good governance. We recommend that for effective decision-making and continuous policy formulation, the application of big data analysis inclusive of cost benefits be fully used in trade sectors concession management to harness good governance.”