The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government granted almost $115m of Excise tax and Customs duty relief during the first half of the 2022-2023 fiscal year, the mid-year Budget documents have revealed.

The section on “tax relief, remissions and other waivers” discloses that tax breaks worth a collective $14.869m were granted on eligible goods imports worth a total $415.632m during the six months to end-December 2022, with the concessions granted under a variety of investment incentives laws and other legislation.

The biggest share, some 36.7 percent or $42.104m, was granted to the Bahamian resort and hotel sector - the largest industry in the country - under the Hotels Encouragement Act. This sum, more than one-third of the value of all Excise and duty tax breaks granted during the fiscal year’s first half, applied to some $161.53m worth of goods imported into the country.

No other industry or sector came close to matching the tax relief bestowed on the hotel industry. The Special Economic Recovery Zones (SERZs), set up in Grand Bahama and Abaco to aid economic recovery and reconstruction in Hurricane Dorian’s wake, attracted tax relief worth $942,678 on some $11.859m in imports.

Elsewhere, exemptions for clothing, footwear and accessories provided some $7.027m in Excise and duty relief on $34.571m worth of imports. Cottage and light industries received tax breaks worth $7.581m on $26.294m in goods, while the relief provided under the Industries Encouragement Act and Family Island Development Encouragement Act stood at $6.313m and $6.58m respectively.

The figures give an insight into the value, extent and range of the investment incentives and tax relief that The Bahamas grants to key industries and economic sectors. While this is seen as helping to stimulate growth, investment and job creation in the target areas, it also represents revenues foregone by the Public Treasury, while the figures may not capture the true amount of concessions because they do not include VAT.

Elsewhere, the mid-year Budget data shows that the Davis administration reallocated or repurposed some $18.257m during the fiscal year’s first half. This represents funding that was already approved in the original Budget in May 2022, but which ministries have subsequently switched between line items to cover new priorities or increased and unplanned costs as they arose.

Included in this sum is a collective $729,000 that has been moved from the advertising, marketing and promotions, and consultancy budget in the Prime Minister’s Office to cover the travel costs and subsistence (living expenses) associated with Philip Davis KC and his delegation attending the COP27 climate change conference in Egypt last year. Over $200,000 was moved for “subsistence”, and the $325,000-plus balance covered air travel.’

Simon Wilson, the Ministry of Finance’s financial secretary, last night told Tribune Business that the repurposing of the $729,000 should not be interpreted as a sign of excessive travel, or that Cabinet ministers and their delegations were travelling more frequently and in larger numbers.

“When you look at the travel amount, it doesn’t represent more people travelling,” he said. “It represents the inflation in travel costs. The amount of seats leaving New Providence has decreased by 20 percent. People act as if we’re back to normal on air travel; we’re not. Most of the airlines have cut drastically the amount of seats coming into the country. That has increased the cost.

“All these things mean higher travel costs. That’s probably the biggest driver of the increase in travel costs; not the amount of people or no of trips, but the cost to travel is so much higher.” The Government’s total travel budget in the 2022-2023 fiscal year was increased by $1.319m in the mid-year Budget, taking the total spend to $16.172m compared to the $14.854m originally forecast.

The greatest increase in the travel budget for the Prime Minister’s Office, which has more than quadrupled from the original $398,546 to $19.33m - a $1.534m increase compared to the May 2022 estimates. The Government previously faced criticism for taking a 70-person delegation to COP27 in Sharm El-Sheikh, Egypt. However, it was stated that some on the trip funded by the private sector.

Justifying that trip, Mr Davis added that he met with the IMF’s top executive at COP 27. “As you may have seen previously reported, the conversation led to a ground-breaking agreement in principle for the IMF to partner with The Bahamas to develop our blue carbon market sector, and to explore swapping debt for carbon credits,” the Prime Minister said.

“You would’ve heard comments about our meetings. This has never happened before, and The Bahamas is set to be in the forefront of this innovation. This is the difference between our approach and what went before. We didn’t go to the IMF begging for a loan - they came to us, you know, to discuss a partnership.”