The Tribune

By DENISE MAYCOCK

Tribune Freeport Reporter

dmaycock@tribunemedia.net

FREEPORT would not be in existence without the Hawksbill Creek Agreement, which has given rise to major infrastructural and investment developments on the island of Grand Bahama.

Known as the nation’s second city and the industrial capital of The Bahamas, Freeport’s development began with the signing of the HCA on August 4, 1955.

The agreement, signed between the Grand Bahama Port Authority Ltd (GBPA), and the Government, is for a period of 99 years and consists of obligations, duties, and exemptions. In it, the government also granted to the GBPA some 230 square miles of land, known as the “Port Area” for development.

Early developers started with the dredging of a deep water harbour, and construction of an airport and roads. These significant infrastructural developments, along with the tax-free concessions in the agreement, helped to attract major industries to the island.

Today, the port facilities have significantly expanded at the harbour with the construction of a container port and a shipyard. The industrial park area consists of major developments including as an oil storage terminal and refinery, plastics and pharmaceutical plants.

There are 3,500 business licencees in Freeport but some of the tax exemptions in the HCA for those licencees are set to expire early next month — including real property tax and business licence fees.

The government has to decide whether to extend these exemptions. It appointed a special committee to review the HCA and to make recommendations for the further economic development of Freeport. Yesterday, Prime Minister Perry Christie announced in the House of Assembly a six-month extension to the tax exemptions for “full analysis and further consultation” due to the comprehensive nature of the committee’s report and the need for legislative bills to be tabled. “At least for the short term, it is vitally important that we maintain the status quo as it relates to the tax concessions in question,” Mr Christie said.

The government said the committee had met “with over 100 stakeholders, including civil society, manufacturers, developers, tourism operators, professionals, and present and former parliamentarians drawn from both sides of the parliamentary divide” as well as holding public meetings.

The imminent expiry of the exemptions had provided an opportunity for the government to “secure a comprehensive set of new arrangements aimed at spurring economic development in Grand Bahama while, at the same time, increasing Grand Bahama’s contribution to net fiscal receipts on a fairer and more equitable basis having regard to interests of The Bahamas as a whole,” according to the Prime Minister.

If the exemptions are not extended, major business licencees would be subject to pay real property tax, which is one per cent per annum of the market value of the property.

Grand Bahama Chamber of Commerce President Kevin Seymour said a number of their members are worried about the agreement lapsing and whether the government will extend those exemptions.

“I had a more than few of our members approach me with respect to what is going to happen; they knew a special committee was appointed and submitted its report to the government, but they wanted to know the outcome,” he said.

Mr Seymour – who was on the committee under chairman Dr Marcus Bethel – said the committee’s report was presented to Cabinet and to the Prime Minister a month ago. “It’s been in government’s hands and the committee has made certain recommendations to the government and we will have to see exactly if the government embraces those recommendations wholeheartedly, or embraces some of them or none of them,” he said.

Mr Seymour believes that the future economic success of Freeport depends on the HCA. “It’s an agreement that the Government of The Bahamas signed for 99 years and because it does not formally expire until 2054, I think it is really not something that anyone has a choice in – the government can either abide by the agreement, or if they choose to, but not likely to do, abrogate the agreement.

“One of the key things, however, is the exemptions relating to real property taxes and business licence fees are scheduled to expire in a few weeks’ time and obviously, as stated in the Chamber’s vision paper, most businesses feel the exemptions should be extended.”

Grand Bahama Taxi Union president David Jones said the HCA has been beneficial for hundreds of cab drivers in Freeport, and feels that government should extend the exemptions.

“We support the extension because the HCA has really benefitted cab drivers, especially when bringing in parts and vehicles,” he said. “The only problem we have with it is where some of tour companies are using their bonded vehicles to do tour work instead of private charter. We took issue with it and have asked that all public transportation franchise be put solely in the hands of the government.”

Mr Jones stated that under the HCA the Port Authority can issue franchises for tour companies. He said that bonded vehicles by private companies and hotels are not only being used for company business, but also being used for transportation of visitors.

“There are private companies using bonded vehicles to take guests from point A to B, and that was one of the issues we had with the HCA, but we support the extension,” he said.

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