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Unpaid Property, Casino Taxes Branded As 'Crazy'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Tax Coalition co-chair yesterday suggested that the Government ‘sell’ its $580 million real property tax receivables to the private sector, describing this and the build-up of $51 million in unpaid casino taxes as “crazy”.

Robert Myers told Tribune Business that the Government should employ the same approach as the private sector, and outsource collection of its tax receivables if it did not have the time and resources to chase them.

Tribune Business articles have previously suggested that the Government adopt a ‘factoring’ approach to unpaid real property taxes, which would involve selling them to the private sector. The ‘buyer’ then assumes responsibility for collecting these taxes.

The Government would receive a multi-million dollar upfront sum, though nowhere near as high as the $580 million in unpaid real property taxes.

It would be relieved of the cost and administrative burden of trying to collect them, and could strike a deal with the ‘buyer’ to still earn a percentage of any taxes that were recouped. Profit caps and escalator clauses could also be used to control the amount of money the private collector would make.

The Government has tentatively begun to outsource collection of its tax receivables, having already engaged the Kikivarakis & Co accounting firm for this task, but this has yet to evolve into a concerted, widespread effort.

Mr Myers said the idea of selling the $580 million real property tax receivable for ‘upfront cash’ that would go to the Treasury was “better than nothing”.

“If they don’t have the capacity, there’s ways just like the private sector does,” he added. “We hire lawyers and collection agencies. Let them take a percentage.

“We don’t have the same capacity to chase it. Why would the Government not employ the same resources that we do?

“Government needs to be run like a business to a large extent; not completely, but a large portion of it is a massive business.”

Mr Myers said the low real property tax compliance rate and collection failures were well known, which was why “it’s so important to get some accountability into government and efficiencies into the civil service”.

And, with significant fines and prison terms set to be levied on businesses who failed to comply with Value-Added Tax (VAT), the Tax Coalition co-chair urged that civil servants who failed to collect due taxes be placed on the same ‘playing field’.

“People need to do their jobs, do it properly and do it well,” Mr Myers added. “If you are going to put fines and imprisonment on the private sector when they don’t collect their taxes, there should be equal treatment for civil servants when they don’t do their jobs.

“There should be no tolerance for that; straight up, shoddy work.”

Mr Myers reiterated that VAT would be unnecessary if the Government collected all the taxes due under the existing system.

And he described the $51 million in unpaid casino taxes, revealed this week by the Auditor General’s report, as “crazy”.

The report urged the Government to finally decide whether $51.572 million in casino taxes owed by operators who have long departed the Bahamas should be written-off.

The bulk of this sum, almost $37.5 million, is owed by two closed Grand Bahama casinos - the Lucayan Beach ($24.226 million) and the Casino at Bahamia ($13.219 million).

A further $5.13 million is owed by billionaire entrepreneur, Philip Ruffin, and his companies from the days when they operated the Crystal Palace casino at Cable Beach.

Carnival Leisure Industries owes $4.077 million from when it ran the same property, and Isle of Capri, a more recent operator of the Grand Lucayan’s casino, departed the Bahamas leaving an unpaid $4.921 million tax bill.

Mr Myers urged that there “be some policy to get that paid back”, suggesting that the Government “work that out” with those companies that remained in existence - especially Mr Ruffin, Isle of Capri and Carnival.

“Why wouldn’t they sit down with those executives and say: ‘Hey, let’s worth this out’,” Mr Myers questioned.

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