The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Progressive Liberal Party's (PLP) chairman has demanded that foreign investors "pay your fair share or look elsewhere" in response to push back over the Government's various new tax and revenue-raising measures.

Fred Mitchell, in a Friday voice note to party supporters, singled out Carnival and the cruise industry; underwater explorers/treasure hunters; the Lyford Cay community; and the Grand Bahama Port Authority (GBPA) for what he branded as "shameful" conduct in response to the Government's efforts to extract a better return for Bahamian taxpayers from use of the country's natural resources.

"I see where Carnival is saying the new head tax on cruise ship passengers needs to be delayed, and then the folks who are hunting for treasure in The Bahamas say they don't want the law to change to give the Bahamas government a greater share," Mr Mitchell blasted, "just like the folks at Lyford Cay who caused Hubert Minnis to reverse course on the land tax on Lyford Cay land.

"Here's the thought. Non-nationals want to live here, use the resources, and damage the environment. Every time you tell them it's time to pay, or extract economic rent for use of our resources, they pitch a hissy fit.... When do they want to pay? It's shameful. I say to all of them - Carnival, the treasure hunters, Lyford Cay and the Grand Bahama Port Authority - pay your fair share or look elsewhere.... Pay you fair share or look elsewhere."

Mr Mitchell's voice note introduced himself as PLP chairman, minister of the public service and MP for Fox Hill, so it is unclear in what capacity he was speaking. While it was likely the former, confusion could quickly arise - given his ministerial role - as to whether he is speaking for the Cabinet and the Government of The Bahamas, and spark unnecessary uncertainty and alarm among foreign investors.

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, on Friday said the Government had agreed that the increased cruise ship passenger departure taxes, as well as the $5 per head environmental levy, would not take effect until January 1, 2024.

This came after the cruise lines voiced concerns that many passengers have already booked cruises between 12-18 months in advance, and implementing the proposed increases from July 1, 2023 - as the Bill seemingly proposed - placed them in the untenable position of having to go back and seek more money from customers to cover the raised taxes or absorb the increases themselves.

The "treasure hunters" referred to be Mr Mitchell are Allen Exploration, but the group and its principals did not - as the minister alleged - state that they were opposed to giving the Government a greater share of the proceeds. Instead, the explorer and its principals, Carl and Gigi Allen, have "determined that they can work" with the revised 50/50 split, as opposed to the previous arrangement where the Government got just a 25 percent share.

Instead, Allen Exploration had voiced fears that restricting the number of exploration and recovery licences that one entity or individual can hold could "incentivise bad actors" to resume plundering wrecks with no economic benefits derived by The Bahamas or its people.

Mr Mitchell's focus on Lyford Cay relates to real property tax reforms that were walked back by the former Minnis administration, due to their unforeseen consequences, while the minister has led the charge in the Government's efforts to apply pressure on the Hayward and St George families to sell the Grand Bahama Port Authority (GBPA).

Meanwhile, Simon Wilson, the Ministry of Finance's financial secretary, told Tribune Business it was "always the intent" that the increased cruise ship passenger departure taxes, plus the environmental and tourism enhancement levies, all take effect from January 1, 2024, to give the lines and their customers time to adjust.

This, though, is not what the Passenger Tax (Amendment) Bill 2023 that was tabled with the 2023-2024 Budget states. Only the $2 per head tourism enhancement levy was specifically delayed until New Year's Day 2024, with the Bill stating: "Subject to subsection (3), this Act shall come into force on the first day of July, 2023."

When this was pointed out, Mr Wilson replied: "That probably was a misprint." Signalling that the Government will lose no revenue from what was already a planned New Year's Day 2024 implementation, he added: "We already indicated the departure tax was to come in on January 1. That was always the intent."

Mr Cooper, on Friday, said: "Suffice to say, we’ve already given a seven-month delay in the implementation of the tax. The tax does not go into force until January 2024, and that’s been a seven-month notice period." He elaborated little beyond this, other than to say the cruise lines had been concerned over their ability to pass the increases on to their passengers.

Michael Pintard, the Free National Movement's (FNM) leader, yesterday queried what impact the six-month delay to implementation will have for the Government's revenue projections as it is aiming to near-triple revenues earned from departing cruise passengers to $145m in the 2023-2024 Budget.

Revenue estimates for the upcoming fiscal year revealed the Davis administration is seeking to increase "sea departure taxes" from the $50.642m initially forecast in 2022-2023, as that projection was exceeded within the year's first nine months thanks to $87.847m being collected.

"With that 'U-turn' decision, the budgeted revenue projections have just been upended and the Budget exercise further fails to deliver for the Bahamian people as a result. The evaporation of the $144m projected revenue sucks the wind out of the Budget sail," Mr Pintard and the FNM argued in a statement. This, though, was countered by Mr Wilson's comments.

Kwasi Thompson, the Opposition's finance spokesman, last night queried why the Bill did not specify January 1, 2024, if that was the intended implementation deadline. "You have to be very clear with these tax matters, especially when they affect thousands of people," he told Tribune Business.

"When the Prime Minister spoke [in the Budget address] he ought to have articulated when these taxes come into effect. He did not mention it. If you intend on doing something, and doing it in a certain period of time, the prime minister - as minister of finance - ought to have been very clear on what taxes were coming in and when they are coming in.

"If the Prime Minister does not do that, this is when confusion comes in, and you cannot have confusion when it comes to the implementation of taxes. This is precisely why, in the initial Budget communication, the Prime Minister ought to have spoken about the taxes that were coming and when they were coming in."

The Passenger Tax Amendment Bill 2023, tabled in the House of Assembly to accompany the 2023-2024 Budget, revealed that the existing $18 per head departure tax is being increased to $23 for "every cruise passenger" leaving The Bahamas via Nassau and Freeport, and to $25 per head for all those who exit "by sea from a private island not visiting any other port in The Bahamas".

The revised tax structure, while designed to incentivise the cruise lines to call on Nassau and Freeport, and thus better spread the wealth through their passengers spending with more Bahamian companies and their employees, imposes departure tax increases of $5 and $7, respectively. They are equivalent to a 27.8 percent and 38.9 percent rise.

In addition, the Bill will also introduce a "tourism environmental levy for every cruise ship passenger arriving or leaving The Bahamas" worth $5 per head. And, finally, for good measure, The Bahamas is also applying a $2 per head "tourism enhancement levy for every passenger arriving in or leaving The Bahamas".

Combined, these two new levies will add a further $7 in taxes and fees for departing cruise passengers. Depending on whether they exit via Nassau or Freeport, or one of The Bahamas' private islands, this will take the per capita fees and taxes paid to $30 and $32, respectively, representing 67 percent and 77.8 percent jumps.