By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government was yesterday urged to rapidly defuse the “ticking timebomb” that is Freeport’s expiring tax breaks, a well-known businessman warning that the city’s private sector is “stuck in limbo” until it acts.
Larry Albury, Freeport Jetwash’s general manager, told Tribune Business that by continually delaying its decision until the bitter end, the Government was deterring fresh investment into the city by both new and existing enterprises.
The Christie administration has again let the clock wind down, much as it did last summer, with just over a week left before Freeport’s real property, income and capital gains tax exemptions expire on February 5, 2016.
Mr Albury questioned whether the Government realised how much Freeport was “hurting” in the absence of decisive action over these incentives, as it created “a vicious circle” that discouraged business expansion and job creation.
He added that too many Freeport-based businesses were acting as “charities”, losing money as they kept staff employed, with some companies already discussing Grand Bahama exit strategies.
“What I don’t understand is that they keep letting it go and go,” Mr Albury told Tribune Business of the absence of any decision on Freeport’s tax exemptions, “and it’s only hurting Freeport.
“The longer we leave something like this, the more investors are going to stay out, and existing investors will invest no more.
“It’s a vicious circle. The longer you leave your answer, the more investors are discouraged, and Freeport needs all the help it can get. It makes you stop and think: Where are we going in Freeport, and what is the answer?’”
Placing the wait for a Government decision in context, Mr Albury added: “The longer they leave this timebomb ticking before they definitely get someone to push the button, and prevent its self-destruction, is quite amazing.
“I hear people talking about strategies to leave the island. I wonder if we’re ever going to get an answer, either yes or no.”
Most observers believe that the Government has little choice but to renew Freeport’s expiring investment incentives, although it will likely attach commitments and terms that other parties must fulfill.
The renewal is likely because the largest private investor in Freeport, Hutchison Whampoa, has already told the Government that it will not commit to further investment in the city until it has certainty that the expiring investment incentives will be renewed.
The Christie administration is pushing hard for Hutchison and its partner, Mediterranean Shipping Company (MSC), to initiate the $250-$300 million Phase V expansion at the Freeport Container Port, and will realise it needs to ‘trade off’ the incentive renewal in order for this to proceed.
Tribune Business understands the Prime Minister is driving for a ‘one-time’ solution that achieves all the Government’s objectives for Freeport, which include the Grand Bahama Port Authority’s (GBPA) sale to new investors and the return of its quasi-governmental powers to Nassau.
Sources familiar with developments have suggested the Government’s pace in relation to Freeport has quickened in recent weeks, and a possible breakthrough - including the announcement of a decision on the expiring incentives - could soon be forthcoming.
The Christie administration will likely seek specific development commitments and timelines from the likes of the Grand Bahama Development Company (DevCo) in return for agreeing to extend the investment incentives.
Its approach will have been encouraged by McKinsey, its international consultants, whose findings effectively make it imperative that the Government extend those incentives if Freeport is to remain a viable and sustainable economy.
Tribune Business exclusively revealed last week how McKinsey had warned the Christie administration that up to 1,100 jobs could be lost in Freeport if it were to ‘trade off’ employment for $80-$100 million in extra revenue generated by allowing those incentives to ‘sunset’.
Mr Albury yesterday summed up the conclusions from the McKinsey report thus: “They’d better leave it alone and let Freeport continue the way it is.
“I don’t see how they’re going to make Freeport pay taxes when we already pay the Grand Bahama Port Authority licence fees and service charges, and land taxes.
“There’s no way people are going to make it. Some people around town are still running generators. It’s not hard to find a lot of people still hurting,” he added.
“For the middle and lower classes, it’s been a year with VAT, and some of them are finding it hard to get the money they need.”
Mr Albury warned that allowing the incentives to expire, which could potentially lead to ‘double taxation’ on real estate, will also “put more strain on businesses”.
“The idea of being in business is to make money, not be a charitable organisation,” he told Tribune Business, warning that an increased tax burden would lead to further closures and lay-offs.
The Freeport Jetwash chief also said it would be “a scary situation” should Nassau assume responsibility for Freeport’s governance and regulation from the GBPA, as the Government has given every indication it wants to do.
Mr Albury expressed concern that Freeport residents would see their ‘quality of life’ deteriorate, based on how the Government has managed the rest of the Bahamas, with efficient public services - such as timely garbage collection - becoming a thing of the past.
“We need an answer to move on with our lives,” he told Tribune Business. “We need an answer for investors to be comfortable after February 5, whatever the decision is, so people will look at investing in Freeport again.
“We have children, we have businesses, so we need to know where we’re going. We’re in limbo, which is not a nice condition to live in.
“I hope and pray the right decision is made. There are Bahamians caught in this limbo, and we need to move on.”
Comments
birdiestrachan 8 years, 2 months ago
Mr: Albury who ever wishes to leave Freeport let them go. There is nothing going on in Freeport . and this has been so for many, many years. Do you know how many persons have left Grand Bahama to seek employment in other Islands not controlled by GBPA. Things are not well in Freeport under GBPA. Perhaps a change may turn things around.
TheMadHatter 8 years, 2 months ago
That is only because you and your buddies in power, and in the public service when out of power, are doing whatever they can to rid Freeport of "the white man" - no matter what the cost. You don't care if 20,000 black men starve as long as you can get rid of the remaining 200 white men in Freeport.
Well, that is your choice, and the choice of those who support you.
birdiestrachan 8 years, 2 months ago
There is no reason for garbage collection to change if that is your worry, Persons who live in Grand Bahama pay for garbage collection it is not free. There are pot holes in Freeport and blown street lights that are not being replaced.
Economist 8 years, 2 months ago
Good points Mr. Albury. No one, that I have spoken to, wants government running the Port Authority.
Most are aware that the government, by its indecision, is a major cause of the lack of investment.
killemwitdakno 8 years, 2 months ago
Doesnt want government to manage Freeport but sure as hell don't want to keep excusing taxes that could help them improve themselves.
birdiestrachan 8 years, 2 months ago
What is GB
What is GBPA doing that is so great, Greater than Bimini, Exuma or Abaco.? where there is no GBPA.?
DEDDIE 8 years, 2 months ago
Reason 1. For the last 10 years my garbage is collected two times a week. I heard a Nassau residence complain about her garbage not been collected in three months.
DEDDIE 8 years, 2 months ago
Reason 2. My water never goes off.
birdiestrachan 8 years, 2 months ago
Debbie you people in Freeport pay to have your garbage collected. Try charging for garbage collection any place else. Many persons in Freeport do not have water. They have to dig wells and buy water pumps. and as for power it does go off. so try again. the floor is yours.
killemwitdakno 8 years, 2 months ago
Not true at all
DEDDIE 8 years, 2 months ago
It's obvious someone don't want you in Freeport. The last time we had an outage equivalent to Nassau two hour plus outages were after the Hurricanes that hit Freeport. Eighty percent of the residence in Freeport are connected to the Utility Company. Reason 3. The traffic lights work 99 percent of the time. Reason 4. The streets of Freeport are always clean. It is not a perfect town but anytime I drive through Eight Mile Rock I am reminded why I don't want the government to take over. The minute you cross the sign announcing the end of the bonded area, the roads immediately goes bad. Visit Freeport and you will feel the same way I do.
DEDDIE 8 years, 2 months ago
By the way in cost $27.60 a month for garbage collection. A mere $3.45 each visit.
TheMadHatter 8 years, 2 months ago
Debbie you are talking to someone (Birdie) who would actually vote for Pindling should his name appear on the ballot next election -nevermind that he is dead. That is just the way old PLPs are programmed. They cannot be re-programmed. If Christie told them they must cut off the head of their first born, they would rush through the kitchen looking for the sharpest knife.
The_Oracle 8 years, 2 months ago
Garbage collection Freeport Vs. Nassau is a prime example of something "Free" being in short supply. I would rather pay $3.45 per pickup than live surrounded by garbage, and not just outside my gate but all over the place in great piles apparently! But we digress, Government has always considered Freeport (and the H.C.A.) a thorn in their side, but politically convenient around election time, when seeking campaign $$, or a distraction from their own failures Nationwide. Nassau fears it's potential, both commercially and politically, and few in Government have ever understood the Document (H.C.A.) written before their time. Successive Governments have pushed and pulled trying to diminish, thwart, undermine or outright abrogate its existence, and all have failed, however the casualties have been significant. I will say the decay of Freeport has been small in comparison to the rest of the country. Could things be better? That is a national question is it not? I believe Maximus Pontificus is to speak to the tax exemptions soon, we shall see if he comes to diminish or enable. Madhatter, what you say about lopping heads off on command would be funny if there were not historical precedent. We are not far from that blind allegiance in both major political camps. There are none so blind, as those who will not see.
sheeprunner12 8 years, 2 months ago
The purpose for setting up Freeport in 1955 is no longer needed ........... Groves, Sands and the other gangster boys are dead ........... the Port has been gutted by the principals and there is little incentive for anyone other than Chinese to buy into Freeport ............. let he black bourgeoisie take over the Port and run it ............... oh I forgot Sir Albert the henchman is dead too.
Economist 8 years, 2 months ago
There is nothing wrong with the Hawksbill Creek Agreement (HCA). It is a very good agreement. It needs both the government and the Port Authority to honour it.
Many other countries are now using it as a matrix to encourage Foreign Direct Investment.
The Agreement provides much more flexibility than the Industries Encouragement Act (IEA).
The IEA requires you to keep going to government to beg for things so is far too political.
Government should extend the HCA.
The_Oracle 8 years, 2 months ago
I agree, nothing wrong with the H.C.A, seems no one in Government, or the Port currently is smart enough to get it running properly. Sad as it represents so much potential for the country as a whole.
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