Law Shouldn't 'Tax You Out Of Business'

By Neil Hartnell

Tribune Business Editor


The Government is “taxing people out of business” via an “unconscionable” Business Licence fee that exacerbates the struggles of loss-making firms, a well-known fiscal hawk is arguing.

Rick Lowe, an executive with the Nassau Institute think-tank, told Tribune Business “it cannot be the intent of the law” to have a tax that plunges a company further into loss to the extent it has to consider shutting down.

Pointing to the Taylor Industries closure, where the “ongoing requirement to pay a Business Licence fee to the Government even though the Company had been making losses for several years” was cited as one factor behind the 75 year-old business’s demise, Mr Lowe agreed it was a case study of what many Bahamian-owned firms were still enduring.

“It’s unconscionable that the law could place a business in a situation like Taylor Industries was placed,” he told this newspaper. “If you’re struggling as a business, and you’re being taxed above and beyond any net profit you’re making, how is that a reasonable tax?

“The law boxes you in. You either pay the money, the tax, or you shut down and go bankrupt and face all the other hurdles you face. I can’t see it being the intent of the law, the Business Licence tax, to do that. It doesn’t make sense to me that would be the fall-out.

“I understand the Government is in a financial bind, but we did not put the Government in a financial bind. The solution is less government and less spending.”

Mr Lowe spoke out after Andrew Davies, the Crowe (Bahamas) accountant who is acting as Taylor Industries’ liquidator, revealed that with the company consistently losing six-figure sums in the run-up to its January 2019 closure, it was still having to pay a business licence based on gross revenues of around $1.5m per annum.

K P Turnquest, the deputy prime minister, subsequently told Tribune Business that while the Government was “very sensitive” to the Business Licence’s fee inequities and flaws it had “not reached the point” of reform that would balance the private sector’s needs with that of the Public Treasury.

The Business Licence fee remains valuable revenue earner for the Government in generating between $120m to $130m per year, but Mr Lowe said: “The Government, and the debt and the spending, are the albatross - the insatiable appetite for more tax dollars.

“If you can’t fund existing stuff, how are you going to fund other stuff bearing in mind you’re taxing people out of business. It’s a dilemma for them as well as those in the business community. It’s certainly exacerbating the situation for those that are not earning money; it’s exacerbating the losses.”

He continued: “That can’t make sense. It can’t be the logical reason for having that law in place. Tough times, tough times. It’s really sad when you see a company like Taylor Industries go out of business but it’s the reality.

“Look at the automotive industry, which has had a really tough decade. There’s a hopeful spirit with the changes to the import taxation, which is helping some and hurting others. How can it be the intent of policymakers to harm business? I don’t see that as being a reasonable explanation. I think they’re making public policy without gathering the facts.”


Craig 1 year ago

I wholeheartedly agree with Rick Lowe. For a company that is having problems, and having successive losses is a sign of major problems, having to pay taxes almost guarantees business failure. If anything the government should have policies in place that tries to help such businesses, it would be a win-win for everyone. Additionally anyone in the construction business in this country can attest that profits as percentage of revenue is very low, therefore having to pay a tax on revenue as a apposed to profits makes it exceedingly difficult to survive


DDK 1 year ago

This Government and the ones before have been fully aware of the business licence problem, particularly for those experiencing financial difficulties as are many, but also for those that are fairly solvent. Indeed the draconian tax based on gross income, coupled with labour laws that offer no mercy to the employer, lead to the demise of many businesses throughout The Islands. I do not believe they give a hoot but if Government does not STRAIGHTEN UP AND FLY RIGHT there will be no-one left to tax. This has been brought to their attention by the so-called stakeholders, Chamber and financial pundits over and over and over again but continues to fall on deaf ears.


joeblow 1 year ago

Inept governments that lack creativity and see the citizens as a revenue source, have no option but to tax and keep on taxing!


JackArawak 1 year ago

I had a business in Abaco in the 90's. High turnover of revenue, low profit margin, was taxed on the gross. "grossly unfair" - The FNM government could have done something about it then; 20 years later and still nothing. Papa wasn't great, I wish y'all would stop saying he was. Minnis still has 3 years to prove himself, so far I am not very impressed but that might change. One can only hope.


birdiestrachan 1 year ago

I agree there is and was nothing great about the FNM Papa. It makes no sense to tax business on their gross profits. What they are left with has to pay all of their expenses. some how it does not seem right,,


John 1 year ago

Driving around in the Wulff Road and then in Palmdale area there were several new "For Rent" signs that went up over the past few days. A clear indication that even though the Minister of Finance says the country has turned the corner to financial recovery, there are many more businesses that will not see the light at the end of this long, dark tunnel. And as was indicated, while businesses struggled thru the past decade plus two years and incurred heavy financial losses, the government, since coming to power, came at them like an angry and hungry dog in search of more taxes. And despite the stellar performance of VAT tax collection due to the willing cooperation of most businesses, government did not embrace that partnership and work closer with, and offer a helping hand, less concessions to struggling businesses. And as more local business close and more money goes overseas, government revenue, too will decrease.


Economist 1 year ago

What is needed is a proper Corporate Income Tax.


bcitizen 1 year ago

No talk about diversifying and growing the economy can be taken seriously with businesses license in it's current sick form. We need corporate income tax with tax breaks/incentives given for capital investments and new employees.


bogart 1 year ago

EXCELLENT...!!!..............BUT THIS DIVERSIFYING AND GROWING.......AND STEMMING DEPOPULATING FAMILY ISLANDS.......WAS BEEN AROUND ...20 YEARS AGO........Particularly offering incentives to BANKS..credits to offset business taxes on banks........located in Family Islands.....and already monitored banks activities by Central Bank.......Govt offering credits points to offset encourage ........to banks to grow economy diversify......importance to growing in Farming....different water farming...fisheries....cows...shrimp...sheep...teas....tomatoes...pineapples....Manufacture..cannery...processing...Fishing..processing.....Construction....Priorities....and govt budget policies to work to develop Family Islands........'STEAD...years now.da banks out of Family Islands.....Family island people moved to Nassau for opportunities.....and taxpayers monies bin frittered away ..cost overruns administration contracts(banks capably fund and administer contracts)........govt still has to maintain intrastructures Family islands fewer population......straining Nassau facilities.....


Sign in to comment