The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian businesses “feel under siege” from the Government’s tax enforcers treating legitimate operators as if they are common criminals, private sector leaders have blasted.

Dionisio D’Aguilar, Superwash’s principal and a former Cabinet minister, told Tribune Business that senior revenue and tax officials “must get the mindset that every business is dishonest out of their head” as he slammed the participation of heavily-armed officers in tax compliance checks as “complete overkill”.

Speaking on the controversy sparked by machine gun-toting police and Defence Force officers accompanying tax officials on visits to CBS Bahamas and other firms, the ex-tourism and aviation minister said the entire business community was “shocked and appalled at the seemingly aggressive way” that the Maritime Revenue Enhancement Task Force is operating.

Asserting that “90-95 percent” of Bahamian companies are likely compliant with their tax and fee obligations, Mr D’Aguilar suggested that “most of those who aren’t” were likely unaware they were in arrears due to the multiple changes to tax laws and regulations in recent years that have left the private sector struggling to keep up.

Pointing to this year’s Business Licence fee payments, which he said required companies to pay for both 2023 and 2024, the Superwash chief said the anticipated introduction of corporate income tax is now “looming over us”.

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, voiced similar sentiments as he told this newspaper that several members felt the tax authorities are treating the private sector “like drug dealers, not business people”.

“It’s the old saying: It’s not what you do, it’s the way that you do it,” he said, adding: “It’s things like that which make you wonder why I’m in business, why I’m doing this. It’s hard enough to make payroll, jump through the hoops that exist and the endless amounts of paperwork, time on the tax portals uploading documents and getting Tax Compliance Certificates (TCCs) and certificates of good standing.”

Marques Williams, president of the Association of Bahamas Marinas (ABM), whose members were among the first to be visited by the Revenue Enhancement Task Force, said several operators were “stunned and startled” by the presence of heavily-armed police and Defence Force officers in the teams conducting the tax compliance checks.

And, while visitors are used to encountering Customs and Immigration officers, he added that the sight of machine gun-wielding police and Defence Force officers had been “a bit alarming for the guests”, warning: “The optics of it caused concern.”

Amid near-universal condemnation from the private sector, the Prime Minister’s spokesperson late last week said the Davis administration will “review” the presence of heavily-armed officers in teams conducting these tax compliance checks. Mr D’Aguilar was among those calling for greater common sense to prevail among the Government and tax authorities.

“One hopes based on the negative response of the community at large about the overly-aggressive tactics employed by the tax collectors of the country that they would be minded to tone down their visitation to businesses,” the Superwash chief blasted. “Everyone was shocked and appalled at the seemingly aggressive way they approached businesses in the South-West Plaza.”

Mr D’Aguilar praised Brent Burrows II, CBS Bahamas’ vice-president of retail and sales, for exposing how the Task Force approached the retailer, saying it had given others courage to speak out and “emboldened elements of the business community to first and foremost initiate their own complaints” about the resulting disruption.

“It just seemed in his [Mr Burrows] eyes an intimidation tactic, and that’s not the way we do business in The Bahamas,” Mr D’Aguilar added. “That’s completely, totally out of hand. They should not have used this tactic of approaching your business with armed officers toting machine guns.”

Commander Bertram Bowleg, chairman of the Government’s Maritime Revenue Enhancement Task Force, previously refuted suggestions that his officers have been “heavy handed” or “aggressive” in their approach. 

He pointed out that it was standard practice for law enforcement to carry weapons in the modern Bahamas, and said the presence of armed officers was necessary to protect tax officials given the possibility that some delinquent companies may react negatively to demands for payment.

Mr D’Aguilar, though, said “they have no evidence yet of businesses responding aggressively to their requests”, and argued that a solitary officer rather than a posse of police and Defence Force personnel was all that was needed to accompany revenue officials and ensure their safety.

“It’s complete overkill approaching businesses with machine gun-toting armed guards,” he told Tribune Business. “It’s ridiculous. Hopefully exposure of this incident will cause them to pause and think rationally and understand the kind of community we have, and react accordingly...

“I think there’s a mindset by certain senior officers in the tax collecting departments that every business is dishonest and must be treated so. They must get this mindset out of their heads. I think 90-95 percent of businesses are compliant, and most of those who aren’t probably do not realise they are non-compliant.

“They’ve been changing the law, and they should use this as an education exercise. This is how you calculate Business Licence or VAT. The laws have changed considerably.. Business Licence, what is included in the definition of revenue and what isn’t. There are a number of changes that have been quite confusing to people,” Mr D’Aguilar said.

“There’s just no need for this seemingly aggressive and adversarial approach to businesses. Businesses are feeling under siege right now with all the changes in tax laws; the fact they’ve altered the way you calculate the Business Licence from one where you calculate it in arrears to one where you estimate future Business Licence fees.

“This year we had to pay the Business Licence fee for 2023 and estimate it for 2024, which was seen by many as very,very unfair. As they say in the vernacular: They just jook it down our throats, take it or leave it. A lot of businesses are feeling they are under siege, and the evidence is in the Budget book.”

Government income is forecast to rise from $3.537bn in the new 2024-2025 fiscal year to $4.078bn in 2026-2027, while its revenue as a percentage of gross domestic product (GDP) is set to jump from 20.3 percent in 2022-2023 to 23.2 percent in the coming fiscal year and then to 25 percent in 2025-2026.

Mr D’Aguilar said this showed more money, in the form of taxes and fees, is being extracted from Bahamian businesses and consumers via taxes and fees to generate these revenue increases. “Businesses feel under attack, and no one is talking about it now, but they’re gearing up to introduce corporate income tax,” he added.

“You cannot grow your economy without growing the business community, and if you’re beating them up all the time and taxing them, they are not going to drive your economy.” Other private sector reaction has been equally negative.

Jak Hannaby-Cummins, Pam Cay’s managing director, last week slammed the Task Force as “barbaric, it’s mindless and completely archaic” in a TV interview. He added that it has visited the south-eastern New Providence community three times in the past three weeks - on June 3, June 6 and again last week - with the final visit involving some 30 officers, not just 10-13.

Tribune Business has also seen another video, taken from surveillance cameras in what appears to be a small retail store, of a Task Force check-up. The proprietor, in a voice over commentary, says: “I had all my papers prepared and was ready for them. I think it was the National Insurance Board, it was Immigration, it was the police.”

Officers are seen entering and exiting the store, including some who are armed and at least one who was wearing a mask. “I trying to figure out why these people are terrorising me like this,” the proprietor says of his hour-long ordeal. “All police, NIB, Immigration, Defence Force. Come on man, you mean to tell me what I did was that big for this type of pressure? This type of pressure ain’t normal.”

The business owner said he was quizzed on how many employees he has, their Immigration status and if their papers are in order. “They were asking me questions before I could answer the previous one,” he said.

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) also entered the fray by arguing that the private sector’s contribution to The Bahamas’ post-COVID recovery has “been met with contempt rather than embrace” by the Government.

“The Budget debate lorded the increase in external reserves by $547m to $2.9bn due to net foreign currency inflows from the private sector rather than borrowing, and while we appreciate the letter of the law, we are concerned that this seemingly welcomed increase has instead been met with contempt for the business community rather than embrace, with invasive inspection strategies toward compliant businesses for documents easily obtained through portal access,” the Chamber said.

“Surely the use of armed forces and uniformed branches are better served to grapple with the impediment of increased crime rather than obstructing day to day operations of businesses and disrupting the ease of doing business for their clientele?”

Mr Albury, the BMDA’s president, told Tribune Business of the Task Force’s CBS Bahamas visit: “I think it was very disturbing. Speaking to a lot of our members, some of the reaction from some was they they felt businesses were being treated like drug dealers, not business people.

“It’s the scare tactics and intimidation tactics that are very concerning to businesses known to be compliant and that have never done anything compromising or out of line. The reaction from a lot of members is they have the impression that the Government knows a lot of businesses that are possibly non-compliant and doing things that are maybe unethical, and these efforts should be directed to those.”

Mr Albury joined Mr D’Aguilar in arguing that the Task Force would be better served to make appointments with businesses in advance, so that they latter can have ready the documents and records they are seeking, which would make the visits more productive. And they noted that the tax authorities likely already possess much of the information being sought in electronic form.

“It’s very unsettling to have armed officers come into your business,” the BMDA president said. “You’d expect that stuff if they have a search warrant or have come to apprehend someone suspected of committing a violent offence, not someone operating a legitimate business and trying to feed their family.

“I understand that the Government is trying to tighten down on everything and ensure compliance. It’s the old saying: It’s not what you do, it’s the way that you do it. I don’t think anyone is opposed to compliance and satisfying any concerns the Government may have. I hope this may have addressed some things; that this way may not have been the proper way to do things.

“Businesses are already under a lot of pressure to comply and jump through a lot of hoops setting up records. We understand they’re trying to get the revenue due to them, and most businesses I think want to be compliant and able to show that. I hope there’s some re-evaluation as to how they approach that,” Mr Albury continued.

“It was a very strong-arm tactic and I would hope there’s some lessons learnt. I don’t think it sheds a good light on the Government and what they are trying to accomplish. I think the general sentiment among all our members is if this could happen to CBS and others in the South-West Plaza it could happen to anybody but, in my heart, I don’t think it should happen again.

“The report that came into the BMDA was very unsettling. I would hate to have an experience like that. Not that I’m afraid they’ll find something out about me, but exposing my staff and customers. If people see armed officers going into your business it sets off alarms that something sinister is happening or more serious.”

Mr Williams, the ABM president, said of his members’ Task Force experience: “Some of the marinas were a bit stunned. They were startled by their arrival. It was a surprise and guests were startled. They typically see Immigration and Customs officers; it’s just that the police and Defence Force officers with the weapons were a bit alarming for the guests, that kind of thing - the optics of it.

“A couple of members raised concerns about it. It was alarming; they didn’t expect it. The optics of it caused concern, especially with the visitors, and what the reasons were for it. They are the ones on vacation. Nobody has seen this activity before. It was just eye-opening and caused everyone to get taken aback a bit.

“They just expected this to be more of a verification of the books. The weapons and military uniforms were a bit extreme for the purpose of verifying revenue. A bit extreme. Everyone was just a bit alarmed at the display. It’s a bit jarring. It just doesn’t happen here in The Bahamas,” Mr Williams added.

“It was just alarming to see the Task Force enter with heavy weaponry to check books. I’m sure they’re going to continue to do the pop-up inspections. They might want to consider how to proceed and how it is perceived by the public and industries like the marinas, which is a highly touristic environment. We want them to think how those optics look.”