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.”