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Govt Would Have Earned Only ‘Miniscule’ Vat From Baha Mar

Minister of Education Jerome Fitzgerald.

Minister of Education Jerome Fitzgerald.

By AVA TURNQUEST

Tribune Chief Reporter

aturnquest@tribunemedia.net

EDUCATION Minister Jerome Fitzgerald defended the Christie administration from backlash after it was revealed that Value-Added Tax (VAT) would not be applied on Baha Mar’s completion, telling ZNS News that the amount that would have been earned in this regard was “miniscule”.

He also said the government would soon move to put the Baha Mar deal in the public domain, to bring an end to speculation and sensationalism on the issue.

He added that the “trade off” for waiving VAT payments for the resort’s completion was the $100 million put forth by the Export Import Bank of China (CEXIM) to pay former Baha Mar workers and Bahamian creditors the money owed to them after the development collapsed.

Mr Fitzgerald was one of the government’s negotiators for a deal to get the resort remobilised.

“What I want to make clear first of all, with regard to the concessions to the Baha Mar project, those concessions were negotiated by the prior administration, we honoured all of those concessions for the new owner and for China Construction,” he told ZNS News following a special Cabinet meeting which the government run news station said was called to discuss the Baha Mar issue.

“With regard to value added tax, I think the issue arose because the completion part of the project, which was really a small amount just to complete the project, the request was made with regard to whether or not value added tax would be charged or connect with regard to that.

“Also at the end of the day, when we calculated the amount for that, because you don’t pay VAT on labour, you’re not paying VAT on imports, the only part would be a small part with regards to services. It was really miniscule as far as we were concerned.

“At the end of the day, the trade off was $100 million which we got in order to settle on the employees, all the Bahamian contractors and creditors and also to secure leases for the Bahamians who had spent millions of dollars inside the resort,” Mr Fitzgerald said.

“So at the end of the day when we looked at it, it was such a miniscule amount it was neither here nor there. So one of the things I’m really looking forward to now is for the agreement to be made public so that we can stop all of this sensationalism that’s going around where I see the government giving away concessions for two or three hundred million dollars in VAT and $400 million that (FNM Deputy Leader) Peter Turnquest is talking about, which is so far from the truth, it is not funny.

“We want to move now to try and put that on the table as quickly as possible. It’s been a good deal for the Bahamian people, there was no giveaway, at the end of the day I think once those facts are (out), I think the Bahamian people will be satisfied we made an excellent deal on behalf of the Bahamian people,” the Marathon MP said.

Sealed deal

Before Mr Fitzgerald made his statement, Bahamas Chamber of Commerce and Employers Confederation Chairman Gowon Bowe weighed in on the issue, renewing calls for the government to clearly elucidate the status of Baha Mar’s sale to Chow Tai Fook Enterprises (CTFE), and which elements are still outstanding before a petition can be made to unseal court documents relating to the transaction.

On Thursday, The Tribune reported the latest leak of information regarding the development, revealing that general contractor China Construction America (CCA), its subcontractors and suppliers, were exempted from the payment of VAT.

While he stated that there was not enough information to exonerate or condemn the purported exemption, Mr Bowe pointed out that VAT was intrinsically a consumer tax.

“Specific to VAT, the outrage, it demonstrates a little bit of ignorance of persons speaking to it,” Mr Bowe said.

“Had it gone in the normal sense of things, they would have paid VAT upfront. The beauty is that the VAT system is one ultimately borne by the consumer. A VAT registrant that pays for a capital transaction would always recover the VAT in any event. It’s not a one time tax, like stamp tax.”

The Tribune reported on an email from CCA, headlined ‘Exemption of VAT’ and issued Wednesday, which stated that all companies working on Baha Mar’s completion had been granted “a full” waiver from payment of the 7.5 per cent levy.

The e-mail, sent by Siyao Shen of CCA (Bahamas) commercial department, said: “It’s agreed with the government that the sub-contractors and suppliers of CCA Bahamas (CCA) shall be entitled to have the benefit of a full exemption from the payment of value added tax for works carried out on the Baha Mar project.”

Having effectively confirmed that the VAT waiver covers all Baha Mar-related construction activity, and includes all its sub-contractors and suppliers - Bahamian and foreign - the CCA e-mail suggests, according to Tribune Business, that they can also recover the taxes paid on bills submitted by their own service providers and suppliers.

Its contents were last night said to be provoking outrage among Bahamians, upset that tax breaks are being granted to the Chinese when the same are not being made available to local businesses and consumers, after the e-mail was widely circulated on social media.

“VAT is a pass through tax paid by the consumer,” Mr Bowe continued. “So the actual owner is never going to pay, it’s going to offset it. No matter what the VAT amount was, there would be future VAT receipts from the same Baha Mar operation that would not be paid to the government because it would have been offset.

“As opposed to Baha Mar paying the government upfront and getting it back from VAT charged to its guests, in this scenario you don’t get to offset.

“Government is forgoing cash up front that it would not have received later on. I don’t expect Baha Mar to be exempt from charging guests. As a company this is a timing of cash flows,” Mr Bowe added.

“There is not sufficient information to exonerate it or condemn it. I’m sure that the Ministry of Finance and Department of Inland Revenue can confirm that this is just a matter of collecting it now versus later. Not that you don’t pay it, but simply of matter when do you pay it.”

State Minister for Finance Michael Halkitis declined comment on the matter yesterday.

Prime Minister Perry Christie announced the official sale of Baha Mar to CTF BM Holdings, a subsidiary of the Hong Kong conglomerate, Chow Tai Fook Enterprises Ltd, in Parliament last month.

He did not disclose the sale price of Baha Mar, adding that details of the deal are still sealed by the Supreme Court at the request of CEXIM.

The heads of agreement between the government and CTF Holdings, however, will be tabled in Parliament once negotiations are complete, he said.

Yesterday Mr Bowe said: “When we say the deal has been sealed, has the sale and purchase been finalised between EXIM and CFTE, has the agreement been crystalised? If part of the condition says you have to finish the project before you can have title, then no it’s not.

“It’s more a case of saying there needs to be very clear communication from the prime minister, the attorney general, as to what are the elements that are still outstanding.

“If there’s nothing between EXIM and CTFE then the basis for keeping it sealed has been removed.”

Mr Bowe said: “I do believe that the time is fast elapsing and there should be an aggressive move to have more details of the transaction revealed, contingent on the court agreeing to do so. The question is when are the parties going to petition the court to have it unsealed?”

Comments

BahamaPundit 4 months, 2 weeks ago

Thst is not the correct question. The correct question is who in the PLP, including the Attorney General, made money as a result of this deal and at the public treasury's expense.

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goodbyebahamas 4 months, 2 weeks ago

Jerome "Gin Nose" Fitzgerald's job for the PLP is to keep the people uneducated, education is a sword of defense in a person's hand. But their own kids go to private schools for the best education possible as they pass down their title of oppressor to them. My Bahamian friend in the photo went to NYU with me, he was top in our class, straight A's in everything he did. He told me that if he was educated in his homeland he would have never accomplished the goals he set for himself. He said, it's who you know and not what you know in Bahamaland; and he's 100% right. God bless the Bahamian people, and march in peace and all good things will come to you....Aloha.

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Zakary 4 months, 2 weeks ago

  • He said, it's who you know and not what you know in Bahamaland; and he's 100% right.

Could not be said any better. Enjoy your stay.

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BahamaPundit 4 months, 2 weeks ago

I now realize I will be old and gray before change happens in the Bahamas, so why bother. The majority of educated Tribune readers are looking for white leadership, based on Eurocentric ideals of logic and equity. The majority of Bahamians, however, still want African leadership by way of a tribal cabal, where the chief does as he pleases and corruption runs rife. Why bother. We are, indeed, wasting our time.

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banker 4 months, 2 weeks ago

This is a very prescient, cogent comment.

In the same fashion, I asked a Chinese banker why they tolerated a Communistic government. He said that they like strong leaders and "guidance' from the government. When I pointed out that what he called "guidance" was a personal restriction, he just shrugged his shoulders to say - you see it your way and I see it mine.

It is true that you will be old and gray before change happens. I posit that we will all be dead before we get to real change.

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ThisIsOurs 4 months, 2 weeks ago

The question I want answered is why was VAT money "traded" to pay Bahamar workers? Why wasn't VAT money taken to pay the teachers who hadn't been paid for months? Why wasn't it used to purchase much needed traffic light replacements? Or fix the air conditioning unit at PMH? Who had the right to decide by themselves that this is what the national tax would be used for? And who will pay the govt back for the months of salaries paid to Bahamar workers?

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Zakary 4 months, 2 weeks ago

We are in for a long ride with Baha Mar...

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goodbyebahamas 4 months, 2 weeks ago

What's sad is that Baha Mar isn't going to do much for the economy unless the crime is controlled. Who the hell wants to visit a place where they have better odds dying than winning in a casino?

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Well_mudda_take_sic 4 months, 2 weeks ago

Crooked Christie and his family, the Wicked Witch Maynard-Gibson and her family and a few cronies of Crooked Christie like greedy Bag Man Baltron Bethel are laughing all the way to the bank as they pocket for their own personal benefit the great wealth they have received from their Red China friends in exchange for screwing our public treasury and the Bahamian people out of tax dollars our country so desperately needs at this time.

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concernedcitizen 4 months, 2 weeks ago

They are laughing all the way to the multi million dollar luxury units the Chinese gave them over looking Central park in New York and by multi million I mean Ten million and up ,,The Chinese did not have to build these Islands like in the South seas they basically bought five high ranking PLP and got the whole Bahamas

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Well_mudda_take_sic 4 months, 2 weeks ago

AS A REMINDER: Slime ball James Smith knew about this VAT waiver all along as he was paying out funds to Baha Mar creditors that he and Vomit claimed to have been received gratis from the Red Chinese Fookers. And this most recently disclosed VAT waiver that our country cannot afford, given by Crooked Christie to his Red China friends, is just the tip of the iceberg. BAHA MAR CREDITORS HAVE BEEN PAID BY BAHAMIAN TAXPAYERS NOT RECEIVING VAT FUNDS THAT CROOKED CHRISTIE'S RED CHINA FRIENDS SHOULD HAVE PAID INTO OUR PUBLIC TREASURY.....AND LYING JAMES SMITH ALL ALONG KNEW THIS TO BE THE CASE! What a joke!!

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hallmark 4 months, 2 weeks ago

I don't care how minimal it is, the country needs it. They sucking all the minimal out of the Bahamian citizens.

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ohdrap4 4 months, 2 weeks ago

It is not 'MINISCULE', 'IRREGARDLESS' !!!

He is the PLP leader in waiting folks!!!

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TigerB 4 months, 2 weeks ago

I went to the store today and paid VAT for my item, still that money was owed to those people, its not like they CCCA was doing them a favor. So what one thing had to do with the next? I'll bet there are more secrets in that court document that is sealed.

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B_I_D___ 4 months, 2 weeks ago

Since when do you NOT pay VAT on labor?

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viewersmatters 4 months, 2 weeks ago

Why couldn't the PM address this concern to the people? And what about Bahamar was for the people from the chapter 11 bankruptcy started to the closer of the documents in courts it's been about the PLP benefiting themselves for personal pleasure and gain. If it had been so much for the people should anything be kept secret and hidden from the people... And when on earth would the Governmentssss learn that they are no longer dealing with the old generations any more this is the new generation you can't feed this generation bullshyt and expect the people to dwell on your words alone, show the proof and show the physical work or save that bullshyt for bathroom time.

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happyfly 4 months, 2 weeks ago

Anyone want to take a bet that no casino tax, no room tax, no operating VAT and 4,000 full time Chinese hotel staff work permits are going to be the next bits of news coming out of Bahamar

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truetruebahamian 4 months, 2 weeks ago

If Christie and co didn't screw Sarkis and the Bahamian public there would have been a logical and reasonable outcome rather than this poorly packaged web of excuses and lies.

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lkalikl 4 months, 2 weeks ago

Fook the PLP! Fook them all!

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sheeprunner12 4 months, 2 weeks ago

If the PLP government had not hi-jacked Sarkis Izmirlian & Bahamar Ch11 case, Fitzgerald and his fellow Cabinet crooks would not have to be here trying to explain away the unexplainable ........... they have not disclosed the new HongKong company deal and still have the old Bahamar deal records sealed in our Supreme Court ........... there is NO transparency or accountability with the PLP ........... and no FOIA either before Election 2017

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birdiestrachan 4 months, 2 weeks ago

How is it that Ismirilian has no fault? He some folks great white Knight/ I am sorry for the man But he messed up big time. and no Government could help him. remember how upset you all were when it was reported that Mr: Christie spoke on Mr: Ishmel Lightboure behalf

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goodbyebahamas 4 months, 2 weeks ago

"He some folks great WHITE knight", not only are you as stupid as the dog$hit I just stepped on in my friends back yard Birdie, but your a F-ing racist who can barely write correctly. Majority Rule....LOL....More like Pindling's racist views to me that have been keeping your people down for decades and enriching you and the PLP mafia.

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lkalikl 4 months, 2 weeks ago

The attorney general's family and the other big PLPs got theirs, that's all that matters to PLPs. Fook all PLPs! Fook the PLP! They and their Chinese allies are a biblical plague on the Bahamas. Locusts be gone!

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sheeprunner12 4 months, 2 weeks ago

And Perry's son as well ............ the PLP elite are sitting pretty with Chinese cash

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Greentea 4 months, 2 weeks ago

Miniscule? One of the largest operations in the country? If that is the rationale then no business smaller than Bahamar should pay VAT- Their contributions by comparison are microscopic! But this is the kind of dumb answer you get from a man who I am told can't balance his own checkbook. Can't expect him to be a good steward of the public purse. He should be nowhere near government. Haven't heard one concrete thing of benefit to the country come from his mouth since he was elected. With that nose, in this picture he looks like a long lost son of PGC!

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concernedcitizen 4 months, 2 weeks ago

He is the young bag man for when Bethel dies ,,You have to have a bag man you can "trust " not to run off to Belize w/ everyones cut of the bribes for selling out a country and its people

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athlete12 4 months, 2 weeks ago

Very tired of hearing about Baha Mar, can they hurry up and open it so it can fail because there's no tourism. Atlantis hasn't turned a profit in years! It will be busy 4 months out of the year like every other hotel on the island.

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