The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s finance spokesman yesterday blasted the “cruel” magnitude of the boat registration fee hikes which he branded “a matter of life and death” for his constituency’s subsistence fishermen.

Kwasi Thompson, the east Grand Bahama MP, told Tribune Business that the ten-fold and greater increases in the first-time and renewal registration fees was “a huge, huge hit” for non-commercial fishermen who catch primarily to feed their families and earn sufficient income to survive.

“The feedback I have been getting from the residents, particularly in the eastern end settlements like Sweeting’s Cay, High Rock and McLean’s Town, has all been completely negative,” he confirmed. “They are fishing villages and they are, for the most part, small fishermen who fish really for the benefit of their families and benefit from selling in Freeport.

“That goes to benefit their families, and to have an increase at the levels that are being reported is a huge, huge hit for them. When this was first announced last year, there was an outcry in the community. I made an outcry to the minister at the time. It is now coming into effect, and is a very, very serious concern particularly for my constituents.

“I think the secretary of the National Fisheries Association went into great detail in explaining the impact it will have on local fishermen, and also went into great detail to explain the extent of the increase from $20 to $700 and, in some instances, even more than that,” Mr Thompson continued.

“Anyone faced with a cost increase of that magnitude..... It’s not a recreation for them. It’s a matter of life and death for them to support their families. It’s absolutely necessary for them to have it [boat registration]. For the Government to put in an increase at this level is absolutely unnecessary, it’s cruel and completely disadvantages those small fishermen, particularly my constituents.”

The boat registration fee hikes, while unveiled at end-May 2023 with the 2023-2024 Budget, have only really begun to kick-in and take effect now for the vast majority of commercial vessel owners as their craft typically only become due for licensing at year-end and the start of the New Year.

As an example, for commercial vessels 20 feet in length, which typically accompany larger fishing vessels on dive operations, their annual registration renewal fees have increased 35-fold - from $20 to $700. And it is not just fishermen who have been impacted, but all commercial boats including tour and excursion providers, tug boat and salvage vessel operators.

One excursion provider was said to have endured a ten-fold increase in registration fees - from $260 to $2,600 - while another boat owner said the fee for their 40-50 foot vessel has increased from $150 to $1,650 per year. While conceding that boat registration fees needed to increase, the latter said it was the magnitude of the hike - coming all at once - that was hurting the industry.

Tavares LaRoda, the New Providence Port Authority’s chairman, could not be reached by Tribune Business for comment yesterday despite calls and messages left on his phone. He previously told this newspaper that the increases to fees that have not been adjusted for two decades were designed to try and catch up with, but not exceed, inflation that has occurred over that period as the Government seeks to incentivise more boat owners to register their vessels in The Bahamas.

Outlining the Davis administration’s strategy, amid the outcry over both the first-time and annual registration fee increases, he argued that the hike in the former category was more than offset by the elimination of an effective 20 percent tax rate on boat owners importing their craft to The Bahamas for the first time via the removal of VAT and Customs duty.

“Please note that the first-time registration fees are paid when a vessel is imported into the country,” he added in an e-mail. “Whilst this fee is higher than the annual registration fee, it is generally significantly lower than the amounts previously paid as Customs duties and VAT which have now been removed from the importation of vessels....

“The Government remains committed supporting the growth and development of our maritime industries. The legislative changes reduce the overall cost the acquire vessels - the key component to the industry’s growth.”

However, Mr Thompson in statement reiterated his belief that the fee increases have created “very real challenges” for Bahamian fishermen. “Many fishermen use their vessels to provide for their families and it is cruel to increase registration in such an extreme way,” he added.

“The Fisheries Association [secretary] has pointed out... that the smaller fishermen may simply be unable to afford these inordinate fee hikes. This PLP government.. are placing small fishermen and commercial boaters in east Grand Bahama and the rest of The Bahamas in an untenable situation.”

Mr Thompson also renewed his and the Opposition’s call for the Government to eliminate VAT on “healthy foods” and medicines if it is really serious about combating inflation and the cost of living crisis facing many Bahamian families. He added that, rather than focus on just one fee hike, it was the overall burden created by multiple increases and adjustments that has to be assessed.

“When you look at the imposition of VAT on breadbasket food items, when you look at the imposition of VAT on medications, when you look at the overall increase in the cost of food and the cost of electricity, these registration fees for boats,” the east Grand Bahama MP said.

“When you also look at what the Government has spoken about with the cost of shipping by air [JDL’s proposed per pound cargo scanning fee], and we also now have to anticipate an increase in NIB coming into effect this year. When you add up the entire amount of increases on the back of inflation that’s already high, for some struggling Bahamians it’s untenable.

“We are saying to the Government that if you want to fight inflation stop adding taxes on the backs of Bahamians. Just remove VAT off of healthy foods, remove VAT off medications. They can do that very simply and have an immediate effect on those who are struggling.”

Eliminating VAT on those items would reduce tax revenues for the Government and force it to make up the loss elsewhere. And the reintroduction of VAT zero ratings and exemptions, which is what Mr Thompson is again calling for, would be contrary to the low-rate, broad-based simple VAT model that was agreed upon by all parties when the tax was brought in in 2015.

The Minnis administration subsequently introduced the zero ratings on bread basket foods and medicines when it increased the VAT rate from 7.5 percent to 12 percent in 2018. This was reversed by the Davis administration when it took office, with the zero ratings eliminated and the VAT rate slashed to 10 percent.

Questioned on these points, Mr Thompson said any revenue loss could be compensated for by increasing the VAT rate on property sales worth $1m or more by two percentage points to 12 percent. The Minnis administration did this for transactions worth more than $2m, but its successor reversed this.

“Unfortunately, the Government gave the tax break to the rich,” he argued. “We are saying you can implement that again. It can assist in paying for tax reductions on healthy foods such as fruits and vegetables.”

As for making VAT more complex with the zero ratings, Mr Thompson argued that fighting inflation and the cost of living crisis was more important than administrative simplicity. “The very same countries that once held that view about having one rate with respect to VAT have changed their view because of the inflation crisis,” he added, while not naming who he is referring to.

“It doesn’t make sense holding on to that view when people are suffering. People across the world have changed their view and taken VAT off most or all food items.” Mr Thompson urged the Government to make the VAT eliminations and speak to the medical community, as well as food retailers and wholesalers, as to where this would have the biggest impacts for health and “struggling Bahamians needing to find inexpensive food.”