The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is reviewing several proposed Budget duty cuts following lobbying by a “confounded” ex-Cabinet minister, who fears they will undermine Bahamian manufacturing and small businesses.

Leslie Miller, himself a paint supplier via Sunburst Paints, told Tribune Business that the tariff reductions on imported paint and associated products, plus batteries, ran completely counter to the Free National Movement’s (FNM) ‘It’s the people’s time’ campaign slogan.

By making imported rivals more competitive on price, Mr Miller, a former minister of trade and industry, warned that the Government’s actions threatened the survival of existing manufacturers while also discouraging Bahamian entrepreneurs from entering the sector.

He added that it also worked against efforts to expand the Bahamian economy via import substitution, and suggested the tariff-cutting proposal had first been submitted to the former Christie administration by major importers.

“I have fought for the last 30 years for Bahamian entrepreneurs to be involved in the local economy of our country, and to assist the Government in its diversification efforts to expand the economy,” Mr Miller told Tribune Business.

“It’s really confounding to me that someone goes ahead and reduces the duty on one item to the detriment of local business people when the Prime Minister is insisting it’s the people’s time.

“This is going against the grain and it’s untenable. I met with the Minister of Finance this morning, and he said he’s going to deal with it. He promised to make some of the necessary corrections he felt would assist us,” the former Minister added.

“At least put the duty back, if not increase it. All of us are catching hell because of the high cost of electricity and high cost of doing business in the Bahamas, and what about supporting other Bahamians coming up through the ranks to produce products used on a daily basis? Others are not going to get into business.”

Mr Turnquest yesterday confirmed he had discussed the proposed paint, stains and varnishes, and batteries tariff cuts with Mr Miller, but said no decision had yet been taken on whether to reverse them.

He acknowledged that the reductions had been inherited from the Christie administration, and conceded they ran counter to the Minnis administration’s pledged support for Bahamian manufacturers and small businesses.

“Leslie Miller and I had a conversation, and he’s made representations,” Mr Turnquest told Tribune Business. “We are certainly going to look at it.

“We certainly don’t want to disadvantage local manufacturers. That has been a major thrust of our Government - to support local manufacturers and small businesses.

“We have had a look at it. We have not reached a conclusion as to what we’ll do, but we’ll have another look at it to see if we can make a correction to the course we’re on.”

The 2017-2018 Budget proposes to slash the tariff rate on imported paints by close to 50 per cent - from 45 per cent to 25 per cent. 

Mr Miller said the actual current rate on imported paint is 60 per cent, and added that similar cuts are lined up for associated products, such as stains and varnishes. 

The former minister said the Budget would impact other manufacturers besides himself, pointing to Bahamian battery suppliers, who will be faced with tariff cuts on imported primary cell and lead acid accumulator batteries. The duties on both will fall from 45 per cent to 25 per cent, and 60/45 per cent to 35 per cent, respectively.

Budget tariff cuts frequently trigger protests and push-back from manufacturers and producers, and trigger the long-standing debate of ‘protecting’ local businesses and ‘Buy Bahamian’ versus allowing consumers to obtain the best prices.

Bahamian manufacturers, due to this nation’s high operating cost structure, are frequently unable to compete on price with foreign rivals who have greater economies of scale. This frequently raises the issue of whether Government policy should ensure the Bahamas maintains a manufacturing base, and the jobs associated with it, especially since tariffs may soon no longer be an effective tool as this nation enters into rules-based trading regimes.

“It can’t be fair,” Mr Miller blasted of the proposed tariff cuts. “We [local manufacturers] control less than 10 per cent of the retail market.

“The proposal [for the tariff cuts] was sent out by the major importers. They don’t buy from local manufacturers. The only person helping manufacturers is Rupert Roberts.

“The major importers are trying to push all of us out of business,” he argued. “The proposal submitted to the prior government took the duty down on paint and associated items, stains and varnishes.

“The Government is going to lose $2-$3 million in badly-needed revenue when it runs a local industry out of business. Why not encourage the major importers to buy from local manufacturers? 

“I’ve tried for 30-plus years, but they’d rather go to Florida and buy from the Cubans and everyone else,” Mr Miller continued. “It’s disgraceful that someone put that in their [the Government’s] head. That can’t be right. 

“How do we encourage Bahamians to become manufacturers, entrepreneurs? How can we encourage import substitution products if we run them out of business? You are now encouraging all of us to close our business.

“I am asking the Government on behalf of all local manufacturers not to do that. We need to keep money in this economy.”

Mr Miller said he had fought this battle ever since founding the Bahamas Light Industries Council some 38 years ago, and argued that all businesses “in this country have an obligation to make a contribution” to the common good.

Pointing out that both canning companies, P W Albury & Sons and Sawyer’s Food Products, had gone out of business in the past five years, the former minister told Tribune Business: “We have now put our family’s future at stake by heeding the Government’s call to produce import substitutes.

“Is this what we want to do: To discourage Bahamians from becoming involved in our economy? I’m asking the Government directly: Don’t go down that road. Why is the Government going against local manufacturers when they are demanding import substitution?

“I hope the Government sees fit to move away from things hampering local businesses in this country when we’re trying to keep our doors open.”

Mr Miller emphasised that small businesses were “the backbone of an economy, not the Baha Mars”, and that the sector needed to be supported if the Bahamas was to achieve healthier, sustainable GDP growth.

“I never dreamed we’d be cut off in this fashion,” he told Tribune Business of the proposed tariff cuts. “It’s really disheartening. Why would the Government want to lose revenues on items that are being imported? 

“I’m just asking for them to do the right thing for those of us struggling and producing products for the domestic market.”