The Tribune

By Natario McKenzie

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government will target untapped existing revenue sources such as the 4 percent yacht charter fee in the upcoming 2019-2020 Budget, the deputy prime minister has revealed.

K Peter Turnquest, addressing the Eleuthera Business Outlook conference, indicated that the Ministry of Finance is focused on improving revenue yields from “low hanging fruit” where past enforcement and collection efforts have been weak as opposed to new or increased taxes from its main sources.

“We are looking at new revenue sources,” he confirmed. “One of the big ones we anticipate is in the yacht registry and chartering industry. We know there are vessels that come here and stay for six months conducting charter business during that time and not registering as commercial entities.

“As a result, The Bahamas gets no revenue. There is a 4 per cent charter fee we are supposed to collect but, if they don’t register, then we are not collecting our 4 per cent. It’s estimated that it could be as high as $50m a year.

“We’re putting in place some legislation as well as technology-based solutions to help us control that and, hopefully, drive that yield up over the next year. A side benefit is that we will be able to deal with some of the illegal activity happening in our waters because we will be able to tell who, where, when and what by using data.”

Bahamian marina operators have been urging the Government for years to enforce the 4 percent charter fee on foreign-owned vessels in Bahamian waters. Peter Maury, then-president of the Association of Bahamas Marinas (ABM), in 2014 told Tribune Business that the Government was only collecting about 30 per cent of the revenues due, and urged it to pursue this “low hanging fruit”.

With new or increased taxes on the Government’s main revenue sources, such as VAT and Customs duties, a combination of political suicide and more than the Bahamian economy is likely able to bear, the 2019-2020 Budget is likely to focus on plugging revenue loopholes such as the 4 percent yacht charter fee.

It is almost certain to include the imposition of VAT or some other levy on Airbnb and vacation rental-type businesses, and other tweaks and adjustments to ensure all taxes existing on the books are fully collected.

Other measures will include the Revenue Enhancement Unit’s creation, and a focus on compliance, enforcement and administration to ensure the Government’s revenue yields are maximised. 

The Budget will also likely reflect the Government’s other policy priorities, including supporting micro, small and medium-sized enterprises (MSMEs) and entrepreneurs, plus improvements to the ease and cost of doing business via the elimination of bureaucracy and red tape.

“There is a reformatting of how we calculate business license tax, for instance, where it will be aligned with the Value Added Tax Act,” Mr Turnquest reiterated, “meaning that there will be no business license fee due on export services or products. By and large there will be no real adjustments to affect you directly.”

He added that there will be no VAT increase nor the introduction of any income-related taxes in the upcoming budget, with the Government instead targeting existing revenue sources and legislative amendments to make current taxes more efficient.

Mr Turnquest said: “We do not see ourselves making any significant amendments or adjustments to our fiscal strategy for this fiscal year. What has been projected will more or less consider some of the priorities that have come up this year, and so you will see some reallocations to address those priorities.

“There will be no increase in VAT. Take that out your mind. Nor do we see any kind of income-related taxes. What we do anticipate is amendments to the law to make some of the tax structures more efficient.”