The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian contractors are “wildly concerned” that a new Business Licence policy is causing consumers to be ‘double taxed’, a former Chamber chairman revealed yesterday.

Robert Myers warned that the resulting increased construction costs for consumers threatened to further depress activity in a still-struggling industry that plays a key role in the fight to increase employment.

He explained that the main project contractor was being required to pay Business Licence fees based on the “aggregate”, or total value, of the development rather than just its portion of the work.

With sub-contractors also paying Business Licence fees on their respective portions of the project work, Mr Myers said the end result was that consumers (developers, businesses and homeowners) were effectively being taxed twice on the same work.

“From the construction standpoint, we’re wildly concerned that with this new Business Licence fee policy consumers are being double taxed,” Mr Myers told Tribune Business.

“They’re making project contractors pay Business Licence fees on their sub-trades, despite the sub-trades paying their own Business Licence fees on these transactions.

“The subs are paying Business Licence fees, but because the subs are one of the trades the general contractor has, you’re being told you’ve got to pay on the aggregate; pay Business Licence fees on their work and your own work.”

Explaining the potential negative consequences for the Bahamian construction industry, Mr Myers added: “All that’s done is increase the cost to the consumer.

“I don’t think it’s truly understood yet. People are going back and forth on it. We’ve asked the Bahamas Institute of Chartered Accountants (BICA), the Bahamian Contractors Association (BCA) and the Chamber to weigh in on it. It’s an ongoing discussion that we need to get to the bottom of.

“My concern is that every time you increase the cost of construction, you deter people from building in the Bahamas. They’ll have a tendency to look elsewhere, the construction cost is already high, and we’ll become less competitive as a nation.”

Mr Myers said that project contractors, in effectively paying Business Licence fees upon their sub-contractors fees, would merely pass the extra costs on “as an overhead charge” to the developers, companies and homeowners who had hired them.

He added that the ‘double taxation’ issue had arisen in discussions with the Department of Inland Revenue over last year’s Business Licence fees, with his companies disputing the Government’s calculation and its basis.

“We’re trying to settle up last year’s Business Licence fee, and objecting to it,” Mr Myers told Tribune Business. “We’re asking that they reconsider.

“I think it’s wrong. It cannot be the intent of the Government to ‘double tax’ the industry on both project contractors and sub-contractors.

“Construction costs are already high, and construction starts are at an all-time low. For God’s sake, why try and do that?”

Mr Myers argued that the Business Licence ‘double taxation’ was also inconsistent with the Government’s efforts to reduce construction material costs via the elimination, or reduction, of Customs duties and border taxes in the last Budget.

“You’ve lowered Customs duties on some construction materials, but at the same time have increase Business Licence fees. It’s like the right hand doesn’t know what the left hand is doing,” he added.

“You’re not increasing the cost to me; you’re increasing the cost to the consumer. I’m going to cover it as an overhead charge.”

Mr Myers said the ‘double taxation’ was the second Business Licence ‘hit’ suffered by the construction industry during the Christie administration’s current term in office, as the rate had been increased from 0.75 per cent to 1.5 per cent.

“They doubled the rate, and are now effectively increasing it again by not understanding this industry and the effect it has,” he added.

Mr Myers said the Bahamas needed to change both the direction and tone surrounding its economy, arguing that there were still “too many negatives” depressing both business and consumer confidence.

“Overall, we need more positive changes,” he told Tribune Business. “We’re still seeing too many negatives, and not enough positives.

“The country and the Government has to be very cognisant of consumer and business confidence being very low, and that’s a problem for an economy.

“Let’s encourage them [the Government] to do what they can about that, and keep communicating with the private sector and businesses to try and improve. Start listening to the private sector and be collaborative. There are problems; let’s work things out.”

Mr Myers said the Bahamas was failing to properly adapt to, and manage, the process of change, adding that the global economy and competitive landscape was changing on an almost daily basis.

Despite the Bahamas’ constant slippage in the World Bank’s ‘ease of doing business’ rankings and other key performance indicators, he said the Government continued to impose ever-increasing costs and taxation on the private sector.

Pointing to the proposed National Health Insurance (NHI) scheme as another impending cost, Mr Myers said: “The tax issue is a big concern.

“I know the Chamber and a bunch of others are upset that the Department of Inland Revenue is vehemently going after people but not doing its job in giving rebates and responding in a timely manner. That’s causing a lot of frustration and concern.”