The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Chamber of Commerce’s president yesterday rejected assertions that Freeport’s new ‘tax breaks’ regime was a “back handed” attempt by the Government to amend the Hawksbill Creek Agreement.

Mick Holding said he “can’t see the link” between the Grand Bahama (Port Area) Investment Incentives Act 2016 and Freeport’s founding treaty, as the tax breaks now subject to the new legislation “no longer exist” under the Hawksbill Creek Agreement.

He explained that the real property tax, capital gains and income tax exemptions, which the Grand Bahama Port Authority’s (GBPA) 3,500 licensees now have to obtain renewal approval from the Government, expired on August 4, 2015.

As a result, Mr Holding said they were no longer covered by, or part of, the Hawksbill Creek Agreement, and were now being dealt with under the Act passed by the Christie administration last year.

The GB Chamber president admitted he had heard the argument that, through the process of having to apply for the tax break renewals, the Government was really trying to obtain the necessary ‘80 per cent’ licensee threshold to change the Hawksbill Creek Agreement.

Freeport’s founding treaty requires the consent, or permission, of fourth-fifths or 80 per cent of GBPA licensees before it can be amended in any way - an obstacle that successive administrations have sought to circumvent by passing other legislation.

One private sector source, speaking to Tribune Business under condition of anonymity on Wednesday, argued that the ‘tax breaks application’ represented another attempt to achieve this by the “back door”, and without openly telling GBPA licensees what the Government was doing.

They explained that if 80 per cent of licensees were to apply to the Government for renewal of their tax breaks for a five-year period, then they were effectively consenting to giving up these rights - which are enshrined in the Hawksbill Creek Agreement - and placing them in the hands of the Minister of Investments and his Cabinet colleagues.

“If four-fifths of the licensees go ahead, fill out that form, submit it and pay the $100 fee, they have effectively agreed to amend the Hawksbill Creek Agreement in this fashion, transferring the power from the GBPA and the Agreement to the Government,” the source told Tribune Business.

“It’s de facto giving them your consent as a licensee if 80 per cent sign that thing. The Government will have its legitimate grounds to amend the Hawksbill Creek Agreement in that way with these stipulations and directions; that your rights and concessions are not granted under the Hawksbill Creek Agreement any more, but subject to the whim of the Minister.”

However, Mr Holding disagreed with this argument, telling Tribune Business: “I can’t see that link, because the link with the Hawksbill Creek Agreement was broken on May 4, 2015.

“Those concessions you can now get through application are the same concessions, but that’s the only link with the Hawksbill Creek Agreement.”

He added: “It’s now by Act of Parliament that those concessions are being granted, not by the Hawksbill Creek Agreement.

“My personal view is that I cannot see how this can be linked back to any part of the Hawksbill Creek Agreement. I cannot see how that can be connected.”

Fred Smith QC, the Callenders & Co attorney and partner, on Thursday agreed with suggestions that the Act and associated application process was an attempt to change the Hawksbill Creek Agreement via the ‘back door’.

However, Mr Holding, referring to the application process, said: “Why do we need to do it? The answer to that is the concessions that we’re now talking about, which were originally embedded in the Hawksbill Creek Agreement, expired on the August 4, 2015. Those concessions no longer exist under the Hawksbill Creek Agreement.

“The Government extended them for a period from August 4, 2015, to May 4, 2016, and now the Act is allowing for the further extension of those concessions to Port licensees.”