The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken QC has been “terrified” by what he perceives as the Government’s planned Freeport ‘tax grab’, forcing him to launch a second Judicial Review challenge to its ongoing Hawksbill Creek Agreement (HCA) assessment.

Fred Smith QC, the Callenders & Co partner, said he had been left “stunned and appalled” by the terms of reference given to the Government committee that was appointed to consult, then make recommendations, on the city’s short and long-term economic future.

In an affidavit accompanying Friday’s Judicial Review bid, Mr Smith alleged that Prime Minister Perry Christie and the Government had “lost the plot” by charging the committee to examine ways to increase Grand Bahama’s ‘contribution to net fiscal receipts’.

This goal, he claimed, was totally contrary to Freeport’s foundation as a ‘tax-free zone’ or ‘Free-port’. And totally unnecessary, with Mr Smith alleging that the city consistently generates $100 million in annual revenues for the Public Treasury - sums it does not receive back.

“I must say I am in a state of some consternation. In particular, I am stunned and appalled at the final sentence of the terms of reference of the committee being to ‘increase the Island’s contribution to net fiscal receipts’,” Mr Smith alleged.

“Contrary to central government’s belief, and this may come as a shock to them, such an objective is not the ‘Raison d’Etre’ of Freeport or Grand Bahama.”

He added that Freeport residents, and the 3,500 Grand Bahama Port Authority (GBPA) licensees, did not see their role as being to increase the Government’s tax and revenue base.

“This insight into the Prime Minister’s thinking terrifies me,” Mr Smith alleged. “It shows me that he and his government have completely ‘Lost The HCA Plot’

“Freeport is supposed to be just that a ‘Free Port’; not a heavily taxed ‘Port’ existing to enhance central government revenues while even less and less is spent by central government in Grand Bahama.

“Really, I ask the Minister of Finance: ‘Where does the approximate $100 million per annum collected in tax revenues go? Certainly not for any infrastructural works or otherwise in Grand Bahama?”

The Hawksbill Creek Agreement, he added, requires the GBPA to reimburse the Government for all expenses under certain provisions of the agreement, plus “an additional uplift of 25 per cent” if Customs Duties collected in the city did not cover the Government’s expenses.

“I have been told by Donald De La Rue and Ian Barry, both at different times chief financial officers of the GBPA, and by Sir Jack Hayward, that upon the annual presentation by the Government of their report to the GBPA of the Customs duties collected in the previous year, revenues have always exceeded Government expenditure and there has never been a call on the GBPA to reimburse the Government,” Mr Smith alleged.

The claims accompany the second Judicial Review bid launched by Mr Smith and fellow Callenders & Co attorney, Carey Leonard, over the Government-instigated review of Freeport’s expiring tax incentives and its longer-term economic development.

Events have moved on since their first Judicial Review bid was thwarted, with the Government-appointed committee completing its report and handing it to the Prime Minister.

Mr Christie last week said the Government was extending the Business Licence and real property tax breaks due to expire on August 4 for a further six months until February 2016, in order to give itself time to more fully consider the committee’s recommendations.

This, though, has failed to satisfy Messrs Smith and Leonard. They are alleging that the consultation process, on which the committee’s report is based, was “fundamentally flawed and a sham” because key documents were not released to those it interviewed.

Chief among these documents is the earlier government-commissioned report by McKinsey & Company, the international consultants, which was described as a major influence on Christie administration thinking and the committee’s work.

Messrs Smith and Leonard are arguing that it is both “procedurally unfair” and “irrational” for stakeholders not to be given this information/report, because they are then unable to make a proper contribution to the deliberations.

And, on this basis, the legal duo are challenging both the Government’s decision to accept the committee’s report, and the committee’s move to submit its report/recommendations, as these actions bring the “flawed consultation” to an end.

They are, if the Supreme Court grants leave to bring Judicial Review proceedings, seeking a temporary Order preventing the Prime Minister and his government from acting on the committee’s recommendations over the expiring tax incentives until the full case is heard.

Messrs Smith and Leonard also want an Order ‘staying’ the Government “decision-making process regarding potential changes to the provisions of the Hawksbill Creek Agreement and the economic and fiscal governance of Freeport”.

They are ultimately seeking Supreme Court Orders that prevent any decisions being made on the basis of the committee’s report; that require the McKinsey report to be made publicly available; and require that a new consultation process be undertaken with Freeport stakeholders.