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Don't 'Add Insult To Injury' Over Dorian's Tax Breaks

* Abaco resort manager says extension an 'investment'

* Says residents 'all going nuts' to beat concession end

* DPM 'comfortable' vehicles will be taxed from year-end

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An Abaco resort manager yesterday warned the Government it will "add insult to injury" if it fails to extend the Hurricane Dorian tax breaks that are due to expire at year-end 2020.

Molly McIntosh, the Bluff House Beach Resort and Marina's general manager, told Tribune Business the Government needed to see a six-month to one-year extension of the Special Economic Recovery Zone benefits as an "investment" that would ultimately more than pay for itself by creating a stronger Abaco economy and therefore more revenues for the Public Treasury long-term.

She revealed that residents and businesses are "are all going nuts" as they desperately race to order essential home/office appliances, furnitures and fixtures within the remaining six weeks before the import duty and VAT exemptions expire, with many unlikely to obtain what they need before that deadline.

Ms McIntosh explained that manufacturing delays and backlogs in the US, resulting from the COVID-19 pandemic, meant increased waiting times pushing the arrival of goods that Abaconians require to outfit their homes and businesses back into 2021.

Adding her voice to those of Ken Hutton, the Abaco Chamber of Commerce's president, and Roscoe Thompson, the Marsh Harbour/Spring City Council’s head, she pleaded with the Minnis administration to give the island more "to get back on its feet" given that Dorian-related reconstruction has been delayed by eight months of COVID-19 related restrictions and lockdowns.

Disclosing a letter she plans to send to both the Ministry of Finance and Ministry of Tourism, she told this newspaper: "We are all going nuts here in Abaco right now trying to purchase things we need to open or to get back in our homes for the New Year. Many people are finding it impossible to order and get things in before the end of the year.

"Due to COVID-19 restrictions and business closings and slow downs in the US and worldwide, manufacturing has been impacted and there are longer than normal waiting times for items to be shipped. If the duty and VAT exemptions could be extended for even six months it would help businesses, as well as home owners and renters, be able to start to get back to normal and operational in order to welcome tourists back to the area.

"We are asking the Government to look at extending the exemptions, and to see it as an investment to ensure Abaco gets back more quickly and starts providing revenue back to the Government. Abaco really needs this or it will cost the Government far more than what they will get by starting VAT and duty back too early. COVID-19 restrictions here and abroad have really slowed the progress."

The Economic Recovery Zones, implemented in late 2019 in Dorian’s aftermath, provide businesses and homeowners in storm-ravaged Abaco and Grand Bahama 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, and has already extended the zones' life once beyond their initial end-June expiry to year-end 2020. And the tax exemptions related to building materials, as well as the elimination of VAT on construction services, do not expire until end-June 2021 to coincide with the close of the fiscal year.

K Peter Turnquest, deputy prime minister and minister of finance, told Tribune Business last night that the only tax breaks expiring at year-end in the zones' relate to furniture/appliances and vehicles.

"On those elements I'm fairly comfortable saying the vehicles will not be extended," he said. "The furniture and furnishings we will have a look at in terms of how we see the building programme for the next six months, and make some determinations about that."

Reiterating that the zones' tax breaks were "not intended to be long-term", Mr Turnquest said of their expiry: "This is one way to tackle the revenue shortfall without increasing taxes."

The deputy prime minister said the zones, and their tax breaks, were created to enable persons without insurance coverage to rebuild their homes and livelihoods, while also stimulating construction and other economic activities.

Acknowledging that COVID-19 may have impacted the pace of rebuilding, he added that the Government may also have to revisit the tax breaks and other incentives granted if reconstruction had not been stimulated as intended.

Ms McIntosh, meanwhile, said homeowners and businesses had to wait to bring in appliances and furniture while they restored their roofs and physical properties. "Now, if they go out to buy it, they can't get it for six to eight weeks, so they will not get them in in time to get under the duty and VAT exemption," she explained. "It's hurting progress and people think it's unfair.

"We're just hoping that if the Government extends it for six months, if they look at it as an investment, the effect will trickle down, everybody will get their stuff coming in, and there will be more money circulating. Right now it's a trickle, and there are more people with their hand out looking for help than money coming in.

"I know the Government needs money. I know there are more people in Nassau that need help. I understand it, but if they think about it and look at it from all points of view, they would make a better decision."

Ms McIntosh emphasised that her pleas were not intended to benefit herself and the Bluff House Beach Resort alone, as she was still able to enjoy duty-free exemptions on all imported resort materials via the Hotels Encouragement Act.

"I can bring in beds that I ordered, but they're not going to be in until January because of manufacturing delays in the US," she added. "We need other businesses to be open. We all need each other in Abaco. Our guests love going to the restaurants and bars. If they can't get open it's going to be hard for my business.

"The benefits of extending the exemptions would be that it will enable Abaco to get back on its feet, get people back in here and the Government will make money. If they start charging taxes now it's going to hurt a lot of people, especially Bahamians who have not been able to get their homes rebuilt.

"In the long run that would greatly reduce the amount of money coming from Abaco. In the short-term it might bring them in more money, but in the long-term it's going to hurt."

Ms McIntosh shared the letter she plans to send to government agencies, which argued that the various COVID-19 lockdowns, curfews and other restrictions had muted the impact of the Special Economic Recovery Zones and their tax breaks.

"Abaco people are resilient, hard working and tenacious but we are suffering. Adding duty and VAT now will just add insult to injury. Give us a chance to rebuild," she urged. "People are finally betting back home to Abaco, have their roofs back on their homes, made some progress toward getting businesses and individuals up to speed, or at least are on track to get there.

"Still, many people have not been able to get electricity turned back on or water running inside their homes. This is real. Can you imagine no power or running water for 14 months? We can imagine. We live it, but yet we are still striving, sacrificing and working."

Making the case for the exemptions to be extended, Ms McIntosh added: "This would be an investment, and would pave the avenue toward the strong contributions that a rebuilt and successful Abaco will bring the country’s economy and, maybe even as important, to the country’s reputation as a leader in providing the best tourism experience.....

"Invest in Abaco, not so much by giving us funds but by not taking funds out of Abaco. Hold off on taxation on items needed to rebuild and refurbish. Abaco has what people have been, and will certainly be, looking for in these days and times when people want to be able to stay distant but still enjoy unending beauty and top quality amenities."

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