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Extended Dorian Tax Breaks Hailed As 'Absolutely Critical'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Abaco’s Chamber of Commerce president yesterday hailed the extension of Dorian-related tax breaks through the 2020 year-end and beyond as “absolutely critical” to reviving reconstruction in COVID-19’s wake.

Ken Hutton, speaking after K Peter Turnquest confirmed that the Special Economic Recovery Zones will be extended beyond their end-June 2020 expiration, said rebuilding efforts had lost time and manpower due to the national and global lockdowns imposed to counter the pandemic.

He told Tribune Business that it was still uncertain whether the year-end deadline for all tax breaks to end, bar those on construction material, will provide “sufficient” time for homeowners and businesses to complete the rebuilding given that COVID-19 still has to fully play out in both The Bahamas and worldwide.

Mr Turnquest, in unveiling the 2020-2021 budget in the House of Assembly, confirmed that the government would continue to ease the cost, and seek to increase the pace, of reconstruction on both Grand Bahama and Abaco by maintaining both islands as effective tax-free zones for a further six months beyond the 2019-2020 fiscal year’s end. And construction materials will retain their VAT/duty exempt status until end-June 2021

“To support the ongoing Hurricane Dorian recovery, we will extend the Special Economic Recovery Zone (Relief Order) 2019 to December 2020 in the first instance, which will include all concessions currently available to the qualifying islands,” Mr Turnquest said.

“For the period January 1, 2021 to June 30, 2021, the concessions will be extended to cover building materials only. Let me repeat: Abaco and Grand Bahama will continue to enjoy the current VAT and duty exemptions through the end of the year.”

Describing the government’s move as “incredibly helpful”, Mr Hutton said: “It is a big deal. It’s a great relief to us here in Abaco. It’s a great decision. Obviously, it was a difficult one in the current circumstance, but it definitely was the right one.

“Abaco is still in need of those concessions to get ourselves back up and running. It’s critical, absolutely critical to Abaco, primarily because with COVID-19 we’ve lost all that time since mid-March. It is the critical component. Is the December timeline going to be sufficient? I don’t know. It depends on the global situation.

“There’s so many factors that are out of our control. We need to focus on what we’re doing right now, and hope the COVID-19 situation resolves itself so we can get back to more businesses starting and get those non-governmental organisations back to complete the projects they were working on, which are also critical to our recovery.”

The Economic Recovery Zones, implemented in late 2019 in Dorian’s aftermath, provide businesses and homeowners in the storm-ravaged areas with a variety of tax breaks and concessions. VAT, import duty and Excise Tax has been eliminated on construction materials and all other physical goods sold and brought into the zones, while discounts have also been provided on real property tax and other real estate-related taxes provided certain conditions are met.

The government also removed VAT from construction services, but Mr Hutton said rebuilding had slowed amid the lockdowns, curfews and business restrictions imposed Bahamas-wide. “The COVID-19 situation has certainly not helped,” he added. “A lot of people, non-governmental organisations (NGOs) and outside people, had to leave.

“It’s certainly not progressed as fast as everyone thought, but we’re progressing as fast as we can. A lot of it will depend on how long this lockdown lasts globally.”

Mr Hutton said the lockdowns and border closures, both in The Bahamas and elsewhere, had prevented second home and vacation rental owners who were “the engine” of the island’s pre-Dorian economy from returning to assess damages and determine whether they will reinvest in rebuilding those properties.

“We have to get past these lockdowns not only locally but internationally to have second home owners come back so they can make a decision and start rebuilding their investment,” the Abaco Chamber chief added. “The second homes, the rental homes were the driving force in this economy.

“A lot of those properties are waiting to be fixed or waiting for the investor to get them fixed and come back on the market. Once we get past this COVID-19 situation, Abaco is on its way to a much more robust recovery than there has been since March.”

Mr Hutton praised the NGO’s for “doing amazing stuff” in putting roofs back on the homes of the 80 percent of Abaco’s population that lacked sufficient catastrophic insurance. He added that many residents were dependent on “donated materials and labour”, with the NGO’s also helping to compensate for the island’s manpower shortages.

“Abaco has about one-third of the population it had pre-Dorian,” he told Tribune Business. “We’re struggling for labour. There’s a lot to be done, but not so many people here. Those [NGO] workers were very useful to support the labour force, and allow people who otherwise could not afford to do so to repair their homes. We need them back.”

Acknowledging that Abaco was also suffering from a lack of suitable accommodation for construction workers, Mr Hutton added: “Commerce has continued even though not a lot of businesses are open. There’s no restaurants, no hotels and no bars, but whatever is working is open.

“Every day gets a little bit better. The debris collection is getting a bit better, and every day central Abaco gets a bit closer to the restoration of power and water. We’re not there yet, but there’s encouraging signs.”

He said Abaconians were worried about the lack of storm shelters with the start of the 2020 hurricane season just weeks away, but said it appeared as if Central Abaco Primary School would be ready for both this and whenever school returns.

Comments

DWW 5 months ago

originally they said 3 years. buncha

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