0

Safeguards Being Put In Place Before Tax-Free Zone Rollout

Prime Minister Dr Hubert Minnis.

Prime Minister Dr Hubert Minnis.

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

GENTRIFICATION, fraud and conflicts-of-interests are threats to the government’s inner-city tax-free zone plan that experts are aiming to create safeguards against before the policy’s rollout next year, Dr Nicola Virgill-Rolle, head of the Economic Planning Unit in the Office of the Prime Minister, said yesterday.

That unit is tasked with putting meat on the bones of the key policy Prime Minister Dr Hubert Minnis has repeatedly foreshadowed in recent weeks.

Last year, Dr Minnis said Bahamians who live and invest in inner-city areas will be exempt from paying customs duties on imported materials, from real property tax, business licence and other taxes and they will pay reduced customs duties on vehicles certified for business.

Gowon Bowe, president of the Bahamas Institute of Chartered Accountants (BICA), said yesterday the devil will be in the details of the plan.

“You have to be very careful you don’t have unintended consequences because of the secretive nature of some of the information up to this point,” he said.

“Saying you having inner-city tax concessions and other economic stimuli, that’s only a headline or header; it’s not inner workings or inner details. What has been communicated is they want a programme to stimulate economic activity in the urban areas. If you’re saying that, what does that mean: does it mean establishing businesses that will cater only to that community or other ones as well? Is it about repopulation in terms of quality housing and safer environments that would create new living spaces and change inner-city culture? Or is it simply a desire to have more funds flowing into the communities?

“All of those have attendant risks and opportunities that can be taken advantage of. What is the objective and what is the cost of doing so? Do you determine whether it should solely be in the inner-city of New Providence or should it be in the less developed Family Islands as well? It’s a lofty aspiration but like much promises the devil is in the details,” Mr Bowe said.

Since Dr Minnis’ initial announcement of the zone, debate has centred on whether it will cause gentrification, the displacement of poorer residents as neighbourhoods are revitalised and renovated.

Dr Virgill-Rolle admitted yesterday gentrification is an issue technocrats will have to address.

She said: “As we looked at the work, we said what could be some of the key issues we have to think about? Gentrification, displacement, is one of those things we said – with smart policy you can ensure that the public policy around this does not allow for displacement. “We’re making sure safeguards are in place as we look through the legislation so that this would be a community effort and people who have been there, who reside there are the ones that come first in this particular initiative.”

The unit is also in the process of analysing the cost of loss revenue from the creation of the tax-free zone, a matter Mr Bowe said will be crucial.

“When you speak about what the government has at its disposal and if it’s a plan restricted to tax concessions,” Mr Bowe said, “the only real tax is our consumption taxes: customs, VAT, real property and business licence fees. If there are going to be a certain level of tax concessions granted what is the expected cost in terms of revenue loss as we look to fulfill our requirements?”

On the potential affects the policy could have on the national deficit, Dr Virgill-Rolle said her unit is working with the Ministry of Finance to make sure what it proposes makes good sense economically.

“We’re undertaking getting the data behind the amount of taxes generated and the tradeoffs from that as you think about incentives as well so you can prepare a well-researched proposal on the tax incentives around this economic empowerment,” she said.

“We’ve been gathering data about who is in this community, which is bordered on Nassau Street going to Poinciana and Wulff Road and then West Avenue coming straight up and then sort of an imaginary line coming from Meeting Street. We’re really focused on understanding what is in this area, the businesses, the residential houses and getting a full account of that from the Department of Statistics. We’re working with Inland Revenue, understanding the tax revenue generated from that so that as we make proposals we do that from a place of evidence and backing.”

As for other challenges, Dr Virgill-Rolle said the unit is safeguarding against potential fraud so “the people who are there are the ones who are benefitting as well.”

“(We are guarding against) any conflicts of interests as well,” she said. “We’re ensuring everyone involved in project design and programme design declare any interests they have in the area so that we can be very upfront with that. All of those types of things that makes it a programme that demonstrates good governance as part of the mandate of the prime minister.”

Dr Virgill-Rolle said experts on her seven-member team find the timeline to fashion the policy “very reasonable”.

“We’re giving ourselves until the end of April,” she said.

“We’ve been working on this from September, August. We are able to put together the right paper and put a compressive paper so Bahamians could have adequate consultation.”

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment