The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday accused wealthy foreign second homeowners of being responsible for 70 percent of all unpaid real property taxes as he hit out at ‘enforcement’ being portrayed as “a scary word”.

Philip Davis KC, addressing the House of Assembly on the proposed 15 percent corporate income tax targeted only at companies that are part of multinational groups with an annual turnover exceeding $800m, asserted that the Government’s tax compliance and enforcement drive was simply designed to ensure equity and that all taxpayers pay their fair share.

While not naming who he was referring to, he accused unidentified persons and groups of trying “to sow seeds of confusion and spread fake news” surrounding the Government’s taxation policies. “We have targeted strategic areas for increases and we enhanced enforcement,” Mr Davis said.

“For example, owners of yachts are paying a bit more in fees to cruise around in our beautiful waters. And local businesses that were avoiding paying Customs duties or real property taxes now have to pay up.  Our main method to generate increased revenues has been improved enforcement and collection. 

“Now, I know when we use the word ‘enforcement’ there are some who try to portray it as a scary word. But enforcement simply means that we’re ensuring everyone follows the law. Most Bahamians don’t mind because they actually follow the law when it comes to taxes. It is a fact that everyday people do not have the means to avoid paying taxes,” he added.

“The single mother living Over-the-Hill doesn’t get to go to the grocery store and say, ‘I don’t think I’ll pay VAT today’. The father who took his family on vacation to Miami doesn’t get to just skip paying Customs duties. He knows his bag will be searched as he passes through Customs and he better not get caught falsifying the numbers.”

Focusing on real property taxes to hammer home his point, Mr Davis said: “About 70 percent of the hundreds of millions of dollars owed in real property taxes is owed by second homeowners. These are non-Bahamians who often own a vacation home or winter home here in The Bahamas.

“For some, we function as their ‘home away from home’ when they want to escape to paradise. Others use their second homes as income generators, renting out their properties to locals and visitors alike. Why is it that, for decades, we allowed many of these second homeowners to not pay their taxes?

“I don’t know if it makes sense to y’all, but it doesn’t make sense to me.
There is a patent unfairness in enforcing tax policies on the poor and middle class but allowing the wealthy to pay when they feel like it. From day one, we resolved to make it clear that no one is above the law and everyone must pay their fair share. The people who are afraid of the word ‘enforcement’ are people who want the status quo to remain in place.”

Mr Davis taunted the Opposition over what he argued was the Minnis administration’s prompt climbdown over real property tax reforms after it received push back from the Lyford Cay Property Owners Association. “Now, fast forward a few years to when this administration announced enhanced real property tax enforcement measures, as well as a nationwide revaluation,” he said. 

“We faced the same kinds of threats. But we did not back down. That’s not our style. Not when we are creating a fairer system for everyone. We implemented the changes like we said we would, and you know what? Those homeowners are still here today. They didn’t leave.

“And the real estate market didn’t crash either. It is booming. Most importantly, everyone now understands that they must pay their fair share. The truth is, the average person doesn’t mind paying taxes as long as they feel empowered, the tax regime is fair and there are clear results indicating where their tax dollars are going,” Mr Davis continued.

“People want to see improvements in areas like education and national security. They want to see new programmes that help people like the National School Breakfast Programme. They want to see improved fiscal responsibility like we’ve seen in the past three years when the debt-to-GDP ratio dropped from over 100 percent to 82 percent.

“They want to see progress toward a balanced Budget, which we are still on target to deliver... People don’t mind paying taxes to an effective and responsible government. Because everyone knows the Government needs revenues to run. We just want our money managed properly.”