By NEIL HARTNELL
Tribune Business Editor
A prominent businessman yesterday said the Oxford Economics study had reinforced his view “that the government must get its house in order before we blindly march into the WTO”.
Robert Myers, a former Chamber of Commerce chairman, told Tribune Business that “decades-old Bahamian businesses that have kept this economy afloat will be put at significant risk” unless this nation reforms its cost and ease of doing business prior to attaining full World Trade Organisation (WTO) membership.
While agreeing that WTO membership was ultimately the “right way to go”, Mr Myers explained that it “has to be on our terms” and benefit both Bahamians and local businesses rather than their foreign competitors.
Suggesting that accession should be delayed until The Bahamas accomplished the recommended broad-based reforms to its governance and business processes, he added that the Government also needed to phase-in tariff reductions to allow existing businesses to recover the capital tied up in pre-WTO duty and VAT border payments.
Revealing that he had just written a $70,000 cheque to cover taxes due on two imported pieces of equipment, a sum equivalent to 75 percent of their purchase price, Mr Myers said it was imperative that the Government create a “level playing field” for his and other businesses by either phasing-in tariff cuts or providing tax credits.
Arguing that the Oxford Economics study had “validated” his earlier position on WTO accession, he told Tribune Business: “I’m even more so of the opinion that the Government has to get its house in order before it accedes to WTO.
“Otherwise they’re going to put all these decades-old businesses at risk, and significant risk. That has to be a priority, and we have to start thinking that as opposed to blindly marching into the WTO.
“I caveat by saying I’m not against WTO,” Mr Myers added. “I think eventually it’s the right way to go. But we have to do it on our terms; do it on terms that are good for Bahamians and Bahamian businesses, not terms that are good for foreigners and foreign businesses.
“That could take a number of years. But it has to be on terms that are favourable to Bahamians and Bahamian businesses. That’s imperative. They have not thought out all these significant issues, and that’s because the technocrats are not business people. They’re not thinking of all the impacts that are going to occur on businesses and business people that have kept the economy afloat for decades.”
Mr Myers praised the Oxford Economics report’s findings as “balanced”, and added: “It still leaves a lot of questions in people’s minds. It makes assumptions one hopes pan out in a positive way, but a lot of that depends on the Government putting its best foot forward finally.
“It’s got to lower the cost of business so that we’re able to compete on a regional scale, which just isn’t the case at the moment. It goes back to the same issue. It’s the same issue for manufacturers, it’s the same issue for retailers.
“We all operate in a world where power costs are three times’ that of the US. Our base of operations is simply too high to be competitive on a regional basis, especially for us as we’re Florida’s nearest neighbour.
“If you’re down in Barbados it’s a different ball game as they have a lot more distance between themselves and a highly competitive regional rival in Florida. Even in the Caribbean conditions vary.”
Mr Myers then called on the Government to phase-in WTO-related tariff reductions so that companies such as his own were able to “depreciate” and run-off the high duty payments on imported equipment prior to accession.
Otherwise, he warned, foreign rivals and others that establish after the tariff eliminations/cuts took place will have a significant financial and competitive advantage. “Of great concern to me is that you’ve got to phase this on so we have a chance to depreciate these very large duties and taxes,” Mr Myers told Tribune Business.
“Otherwise you’re going to put people that have invested their lives in The Bahamas at a serious risk of being completely uncompetitive. These are big numbers. I just wrote a cheque yesterday for $70,000 on two pieces of equipment for duty and VAT. It’s 75 percent of the value of the machinery, and I have to depreciate that over the next five to eight years.
“Either do this by phasing it in or giving businesses tax credits back for their duties - the difference between the old rates and what they pay now. When you pay on machinery you get nothing back and pay in advance. We’re paying a large tax upfront that has to be depreciated over five to eight years,” he added.
“We’ve got to have some concessions back if we’re going into an environment where they cut the duty and the guy starting a business on day one post-WTO will have a cost advantage over those who have paid these massive duties.
“That’s simply not fair. It’s an inequitable playing field, and a slap in the face to the good business people that have created employment and GDP growth and everything else for many decades before WTO.”
While countries are usually allowed to phase-in tariff eliminations and cuts upon joining the WTO, they are typically only permitted three to five years to do so.