The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Freeport attorney yesterday expressed relief that the Government had not sought to “hold the licensees hostage” over the 20-year ‘blanket’ extension of their tax breaks.

Carey Leonard, a former Grand Bahama Port Authority (GBPA) in-house counsel, told Tribune Business he was “delighted” that the Minnis administration had not tied its repeal of Freeport’s incentive legislation to negotiations with the city’s two largest investors.

Mr Leonard said efforts by previous governments to hold the GBPA’s owners, and Hutchison Whampoa, accountable for their obligations had wrongly dragged in the former’s 3,500 licensees when the issue of Freeport’s tax/incentive regime needed to be dealt with separately.

“To be quite frank, I’m delighted to hear they’ve not spent hours and hours trying to tie what to do with Hutchison and the families [the Haywards and St Georges] to the extension,” he told Tribune Business.

“I would argue that licensees have been held hostage by what the Government has wanted to do with those two. The Hawksbill Creek Agreement is a contract between the Government and the Port Authority, and I’ve always maintained we should go about giving the incentives to everyone, which I’m glad they’ve done.”

Mr Leonard was speaking after the Government unveiled its repeal of the Christie administration’s Grand Bahama (Port Area) Investment Incentives Act 2016, via a Bill which gives a ‘blanket’ 20-year extension of Freeport’s real property tax, income and capital gains tax exemptions to all - not just the GBPA and Hutchison.

“If the Government wants to have discussions with the families and Hutchison over the performance of their obligations under the Hawksbill Creek Agreement, and it’s really a non-performance, take it up as a separate issue,” the now-Callenders & Co attorney reiterated. “Don’t hold the licensees hostage.

“The Government has not done that, and needs to get the economy moving regardless of whatever Hutchison and the families have or have not done. I’m very pleased with that news.”

The Grand Bahama (Port Area) Extension of Tax Exemptions Bill, tabled in the House of Assembly yesterday, makes the 20-year ‘tax breaks’ renewal retroactive to May 4, 2016, effectively reducing its useful life to 19 years. It states that the renewal of real property tax, income and capital gains tax exemptions applies “to the Port Authority, its licensees and homeowners in the Port area”.

These three exemptions, which licensees enjoyed by right under the Hawksbill Creek Agreement, expired in early August 2015, and discussions over their fate ultimately led to the Christie administration’s new incentive legislation.

That Act, though, was viewed as especially unsatisfactory because it extended preferential treatment to the GBPA and Hutchison group entities, while discriminating against all the former’s licensees.

While Freeport’s two largest investors received an automatic 20-year extension, everyone else was required to apply to the Investments Board in Nassau for renewal of their ‘tax breaks’.

This ‘application’ requirement is scrapped by the replacement legislation, and Mr Leonard said the Bill’s passage into law would give existing and potential businesses in Freeport the confidence they need to invest and expand.

“Good. Excellent,” he replied, when informed of the Bill by Tribune Business. “That gives business certainty. If you come here and invest now you have 19 years. I’m delighted with that. I think it’ll be a boost to the economy. It’s a very good move.”

Mr Leonard said the Christie administration’s Act had “frozen” Freeport’s second home market due to uncertainty over whether foreign buyers and owners would be subjected to real property tax.

“With the last Bill there was no clarity on real property tax, especially for second homeowners,” he told Tribune Business. “It froze everything, and a lot of people were talking about selling and getting out.

“This Bill gives clarity, certainty, and people now know that if they own a home in Freeport they will not have to pay real property tax.”

Mr Leonard emphasised that Freeport real estate owners were “not enjoying a free ride” when it came to taxation, as they were already paying service charges to the GBPA and its various affiliates.

Suggesting that any imposition of real property tax in Freeport would amount to ‘double taxation’, he added: “It’s not a free ride. They were paying service charges, and people in Nassau forget that.”

Mr Leonard added that the Minnis administration’s Bill would allow Freeport to be marketed “for the first time in seven years”, arguing that uncertainty over whether the three expiring tax exemptions would be renewed had left it with “nothing but uncertainty” to promote.

“For the first time in seven years it’s given us the ability to go out and market Grand Bahama,” he told Tribune Business. “We had nothing to market but uncertainty from 2010, as we were nearing the expiration date then.

“I think it’s positive. Let’s hope it works.”