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Over-The-Hill – But A Third Under The Wire

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

ONLY 30 per cent of businesses in Over-the-Hill communities operate within the formal economy, a hurdle for owners that may seek to benefit from the government’s rejuvenation plan for the area, Financial Secretary Marlon Johnson indicated during a town hall event last night.

The town hall was the first since the government released a white paper outlining its plan to rejuvenate the communities.

The distinctive prominence of the informal economy in the Over-the-Hill communities is highlighted by the fact that overall, 70 per cent of businesses in The Bahamas exist within the formal sector, according to 2012 Inter-American Development Bank (IDB) study.

Mr Johnson said: “Although (Over-the-Hill communities) have a strong small business community, formal businesses are underrepresented in the community.”

As part of a survey conducted in 2016, Mr Johnson said, the Business Licensing Unit “went out and uncovered that just under 600, 700 businesses or quasi-businesses (existed in the area), yet under 200 of them were actually in the formal sector. So you have business going on, you all know it, you live in the communities, yet a relatively small number are registered and formalised.”

Businesses operating in the grey zone don’t pay taxes or make National Insurance Board (NIB) contributions.

“A lot of the prevailing wisdom is you avoid getting registered because you don’t have to pay your tax, your business licence fees or because it had been a hassle in a lot of ways to get registered,” Mr Johnson said. “The challenge with that when you are outside the formal community is getting access to credit, getting access to concessions, it becomes difficult; so the happy challenge we have is to lower the barriers for businesses within the community to become a part of the formal sector and find ways to become low cost and low hassle and that then opens the door for them in the formal sector to access credit and get the concessions and the things they need in order to go and to thrive.”

Last night as he opened the town hall, Prime Minister Dr Hubert Minnis told residents that his vision to transform inner city areas was not confined to the Over-the-Hill area. He promised the plan would expand to other areas in due course.

“My vision was broad, and included any areas experiencing issues such as high levels of crime, poverty and social decay,” Dr Minnis said. “But as we all know, every journey begins with the first step, and what you are seeing today is the first step in that process.

“Let me be clear, what you are seeing before you is not just a tax exemption plan as many persons have described it.

“Yes the plan does include exemptions on certain categories of items. This bold new initiative is designed to provide financial assistance to residents and businesses in the area. But more importantly, the white paper outlines a plan to not just give a man a fish, but it presents a plan to teach a man to fish.

“For those persons and businesses outside the Bain and Grants Town, or Centreville zone, do not lose hope. As this is all new, we are simply beginning of a process, to create a blueprint or model. We will reach out to other communities in due course.

“I am confident that through this process initiatives will be introduced designed to restore these communities,” Dr Minnis said.

Under the Over-the-Hill initiative, residents in the designated economic empowerment zone and businesses that make less than $5 million per year will be exempt from real property taxes, business licence fees, stamp tax, excise tax and customs duties on materials necessary for construction. Non-registered businesses won’t benefit from some of the tax exemptions.

Critics believe the initiative could spur gentrification. Some business owners in the area are concerned that businesses will come from outside and encroach on their markets.

Mr Johnson, however, said it is desirable to have a combination of growth for existing businesses in the area and the emergence of businesses from outside as well.

“You want commercial activity,” he said. “Primarily you gear it at people who are already living in the community and working in the community but the idea is also to create additional economic opportunity. The more businesses that are there, the more employment it will create. The idea is to create a hub and to have an influx of businesses to the community.”

During last night’s town hall, residents expressed a wide range of concerns. Some persons lamented the state of the environment. Others bemoaned longstanding land issues that have left people living on properties without a legal title.

Officials stressed that though the white paper was released last week, the government is listening to suggestions for how the initiative could be improved.

Comments

proudloudandfnm 6 months, 1 week ago

Amazing. They were able to put an entire plan together for over the hill in their first year but can't negotiate a hotel sale in a year.

Something stinks....

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Dawes 6 months, 1 week ago

maybe as the hotel is owned by a private entity and the purchaser would be a private entity there is not much they can do except get the two together and offer incentives. If you are so sure the hotel would work why don't you buy it?

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DDK 6 months, 1 week ago

How long are these tax exemptions to last? A large number, perhaps even the majority, of businesses in the Bahamas gross less than five million dollars per annum. It is difficult to understand why all of these concessions are to be granted to folks Over-The-Hill that have been operating quite illegally while a great many of those operating within the confines of business regulations continue to struggle to make ends meet. It sure would seem to make sense for such concerns to relocate Over-The-Hill to reap the benefits of all of the tax exemptions!

"Non-registered businesses won’t benefit from some of the tax exemptions." Does this mean they will be permitted to continue to operate illegally? Is there a difference between being non-registered and operating illegally?

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proudloudandfnm 6 months, 1 week ago

The entire country is in trouble. This does nothing for any other island. So I can only come to one conclusion. This is designed to favor the FNM in the next election.

Maybe the Bahamas needs an electoral college. Nassau is where the vote is in our country. So we out islanders get all the promises in campaigns but once election is over we are ignored. Time for that garbage to stop. We need a better system...

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DDK 6 months, 1 week ago

I hear you and your conclusion may well be right but PLEASE let's not even THINK about mimicking the U.S. system!

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John 6 months, 1 week ago

Don't let Marlon Johnson mess things up at Finance and leave it like he did BTC! He was the one that introduced the minimal profit margins that put so many Top Up Vendors and small businesses, yes in the same area he is addressing now...OUT OF BUSINESS Glad to see Marlon Johnson is able to view some of the damage he caused. First hand! Most businesses start off with a profit margin of 20 - 35 percent and end up with net profits of 5 to 10 percent Marlon tried to get retailers to operate on a 5-6 percent gross profit which is totally impossible. So most retailers are selling Top Up at a 15-25 percent LOSS! It was convenience items like phone cards and top up that kept little mom and pop stores in the over the hill area open they could make a little something when the big stores are closed. But Marlon Johnson change that He made these stores go from making a profit to virtually paying BTC for selling its products. And Aliv came and joined the game Johnson knows little or nothing about Finance or Economics. How can the businesses pay all the relevant fees and be legitimate if they are operating on 5 cents on the dollar? Pure dumbness

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