The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to follow Sir Lynden Pindling’s lead and extend Freeport’s expiring investment incentives for two years rather than six months, thereby relieving the private sector’s “state of flux”.

Fred Smith QC, the Callenders & Co attorney and partner, while backing the Government’s announcement to extend the incentives due to expire on August 4 for a further six months, called on it to seek longer-term rather than “band aid solutions”.

Prime Minister Perry Christie, in unveiling legislation to extend Freeport’s expiring incentives until February 4, 2016, said: “It is vitally important that we maintain the status quo as it relates to the tax concessions.”

He added that the extension was necessary to give the Government time to consider all the recommendations in the report produced by the committee it appointed to consult, and determine, the best route for Freeport’s future development.

Backing the extension, at least in principle, Mr Smith told Tribune Business: “I am extremely pleased that the Government has taken a sensible, temporary move to allow, hopefully, a proper consultation process to be undertaken.

“This six months, though, is not enough. Sir Lynden allowed a two-year extension for consultation, which led to the first permanent extension, and there is too much at stake to be rushing this process.

“Although I welcome this temporary extension, it is a band aid solution and one that continues to keep the economy and business community in Freeport in a state of flux. We do not know where we are.”

Mr Smith added that the “temporary reprieve from increasing taxation” showed “how utterly at sea and adrift the Government is when it deals with issues relating to Freeport”.

He added that it consistently “keeps everyone in a state of suspense and that, simply put, is terrible for business”.

Arguing that a two-year extension would provide time for proper consultation over Freeport’s expiring tax breaks, and development of a long-term plan for the city’s growth and evolution, Mr Smith said: “My simple message to the Government is: Stop rushing and being secretive with this process.”

He reiterated his call for the Government to produce a copy of the report on Freeport that was conducted by the international consultancy, McKinsey, and which provided the basis for its committee’s subsequent consultations and own report.

He did not, though, ask for the Government committee’s report, describing it as “misconceived and fundamentally flawed” because it had not incorporated the views of himself and others among the 3,500 strong Grand Bahama Port Authority (GBPA) licensee community.

A more sanguine view was taken by Mr Smith’s fellow Freeport-based attorney, Terence Gape, who was grateful that the Government did not let the August 4 deadline “come and go”, creating more uncertainty among the city’s private sector.

“I think that this is a good thing,” the Dupuch & Turnquest partner said of the six-month extension, “because it obviously means that the report from the committee must contain far-reaching recommendations that need serious consideration.

“The six-month extension is a good thing so that serious consideration can be given to those recommendations, whatever they are.”

Mr Gape said the Prime Minister’s announcement created some “relief” for the business community, as it showed the Government was both taking Freeport’s issues seriously and “still intending to deal with them expeditiously”.

“I’m very happy they didn’t just let it come and go,” Mr Gape told Tribune Business of the August 4 deadline.

Among the tax/investment incentives set to expire on that day are real property tax and Business Licence exemptions, plus the absence of capital levies and taxes on capital gains and capital appreciation.

The exemption ensuring there are no taxes on the Port Authority or the earnings of its licensees is also set to expire on August 4.

Freeport’s already-shaky business environment has been further undermined by the previous lack of clarity surrounding the Government’s plans for the expiring exemptions, and whether it intended to renew them or not.

Existing and potential investors had held off on expansion plans and new projects due to the resulting uncertainty which, at least for the short-term, has been lifted.