The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Eleuthera's private sector yesterday called for an 18-24 month construction sector tax break package after the national lockdown caused a "greater than 90 percent" drop-off for most businesses.

Thomas Sands, president of the island's Chamber of Commerce, told Tribune Business that the construction industry should be targeted for incentives due to its "tremendous potential for restarting the economy" amid the gradual easing of COVID-19 restrictions.

With 83 percent of firms canvassed by the Eleuthera Chamber revealing that business activity has come to a virtual standstill due to the national lockdown, Mr Sands urged the Minnis administration to back-up Sunday's decision to re-open construction and associated building materials suppliers on the Family Islands with a well thought-out stimulus package.

He argued that VAT concessions and other tax breaks should also be provided to connected industries, such as a real estate, in a bid to "re-ignite" buyer interest in deals that were either cancelled or put on hold due to the government's COVID-19 measures.

And Mr Sands urged the government to give serious thought to re-opening all businesses on islands such as Eleuthera where no trace of COVID-19 has yet been found, pointing out that all aspects of their economies are interconnected and cannot function properly without sectors that are missing.

Confirming that Eleuthera's private sector has not been spared from the nationwide lockdown, Mr Sands revealed in e-mailed replies to Tribune Business questions: "The Eleuthera Chamber of Commerce launched a survey earlier this week to assess the impact of the COVID-19 pandemic on businesses.

"Our initial results indicate that 83 percent of respondents have experienced a decline of greater than 90 percent in business activity. This is significant." Nor was the island immune from the global tourism industry shutdown, he added, with the closure of nearby cruise ship private islands putting some 200 Bahamians out of work.

"I've been advised that Princess Cays and Half Moon Cay have been closed, which has resulted in the laying-off of over 200 workers," the Eleuthera Chamber chief added. "Also, all of the other on-island projects have halted, so this has negatively impacted household incomes.

"I believe that prior to COVID-19, our economy was on the brink of recovery. With the decline in business activity, the loss of so many jobs, and the halting of several major projects, the future seems pretty uncertain."

However, Mr Sands said the Government was on-point with its decision to re-open the construction industry and building materials/hardware stores across all Family Islands first. "We believe that there is tremendous potential for restarting the economy in that sector," he added.

"One of our Board members, who owns a business in the construction industry, noted that some of his international clients are still interested in funding their projects. This is encouraging. I think that there is also an opportunity for the Government to incentivise construction on the Family Islands by removing duty and VAT on building materials and finishings for the next 18-24 months.

"This way, we would lower construction costs and Bahamians with means and an interest in building second homes on the Family Islands would be encouraged to do so. Additionally, one of the major construction challenges faced by contractors on the Family Islands is the ability to access construction equipment," Mr Sands added.

"If the Government could remove the duty and VAT on construction equipment for a period of time, we would be able to further bolster our construction industry. This effort to lower the cost should also allow local hardware stores to extend lower price points to the average Bahamian, who must continue to maintain or improve their personal surroundings and business infrastructure as they reopen."

Mr Sands added that sectors connected to construction should not be ignored in any stimulus effort, and said: "As an added incentive to get persons investing in The Bahamas (and the Family Islands in particular), I believe that the Government should remove VAT from real estate sales for 12 months.

"Another one of our Board members, who is a real estate agent on the island, noted that many of the real estate deals that were in the pipeline prior to the COVID-19 pandemic have been cancelled or put on hold. If we want to re-ignite interest, I believe that offering this tax break could really get persons (Bahamian and foreign) moving on closing those deals in the immediate term."

Noting how interconnected the Bahamian economy is, especially in the Family Islands, Mr Sands added: "As we continue to talk about whether or not to reopen Family Island businesses, I think that we need to consider getting to the place where we allow all on-island businesses to open because all of these businesses are interconnected.

"It's hard to open automobile parts businesses without allowing mechanics to operate. Similarly, it's difficult for businesses with back offices to operate if they are unable to purchase paper and supplies for the stationery store. So, on Family Islands, consideration should be given for all businesses to open so those living and working on the island can be properly serviced."

Many private sector observers have argued to Tribune Business that the Government needs to give serious consideration to allowing Family Islands where COVID-19 has not been detected to fully re-open rather than impose a Nassau-centric approach throughout the country.

However, Mr Sands said the feeling among the Eleuthera Chamber of Commerce's Board was that The Bahamas needed to be careful when it came to opening up such islands to inter-island and international travel once again.

"The Family Islands should be reopened cautiously. Specifically, we feel that before our borders are reopened, we need to have clear guidelines which set out how various business sectors should interact with the general public (and non-locals) in the future," he added.

"We maintain that any opening of borders, even for inter-island travel, should be approached cautiously. It is felt that before we can begin to consider inter-island travel, specific guidelines related to the hotel, vacation rental and cruise sectors, and the airline sectors need to be developed. Unless there are clear parameters in place that safeguard both employees and visitors, we should not rush to open our borders."