By NEIL HARTNELL
Tribune Business Editor
A prominent realtor yesterday warned that Democratic control of both houses in the US Congress could hit The Bahamas' post-COVID recovery if the party moves to push through steep tax hikes.
John Christie, HG Christie’s president and managing broker, told Tribune Business that while he remained "bullish" on the Bahamian real estate market's prospects for 2021 this could all be undermined if US tax increases reduced disposable income and eroded confidence among both potential tourists and property purchasers.
He warned that the main threats to his positive outlook, especially for the international segment, were ongoing COVID-19 uncertainties coupled with "any radical changes in the US if they start raising taxes and take all the wealthy people's money".
"That could have a trickle down effect on us in a big way," he warned. "We hope that doesn't happen for sure. I had hoped that the [Senate] election would keep the Republicans in power there and create a check on taxes. If that had happened it would have kept the good times rolling."
However, Democratic challengers, Jon Ossoff and Raphael Warnock, unseated both Georgia Senate incumbents, David Perdue and Kelly Loeffler, in an election that was overshadowed by Wednesday's storming of Capitol Hill and the US Congress by Donald Trump's supporters.
That outcome creates a 50-50 tie in the Senate between Republicans and Democrats that can be broken by incoming Democratic vice-president, Kamala Harris. This, in effect, gives the Democrats control of both houses of Congress and the presidency via Joe Biden, which in theory will enable them to easily push through a legislative agenda that could involve significant tax hikes.
"I don't think it's good," Mr Christie said of the Senate election outcome. "It just remains to be seen what they do. The stock market hasn't crashed, and right now people are feeling good, but if they raise everyone's taxes in the US it won't be good. There will be less money for tourism and Bahamian real estate.
"Any time you have people talking about raising taxes on the whole it isn't good for The Bahamas. That's taking money out of someone's vacation pocket, which is not good for us. It is what it is. We've got to do our best. We continue to be very busy right now, and hopefully that continues."
While many Bahamians and residents will doubtless be glad to witness Donald Trump's departure from the presidency in 12 days' time, Democratic administrations have traditionally not always been as kind to this nation's economy and key industries as their Republican counterparts.
Take financial services. Both the Clinton and Obama administrations were much closer to the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) position on so-called "harmful tax practices", and effectively enabled both to pursue their initiatives against The Bahamas and others, whereas the Bush administration stymied the latter body for eight years.
Mr Christie, meanwhile, while revealing that real estate sales volumes were down 30 percent in 2020 compared to a COVID-free 2019, said the outcome "could have been a lot worse than that". He added: "There's still been a number of large sales. People are not just looking; they're buying.
"We're very bullish on it. It's been very busy, and we're very optimistic about 2021. People have been held back for all of 2020, and there's a rubber band effect. We've been busy over Christmas and because there's more people working, the decision to buy now is made, as they see the need to move before prices go up.
"I think with COVID-19 people are coming out and selling, especially in the luxury market. In most communities things are selling." Mr Christie voiced optimism that the international side of the Bahamian real estate market could even recover to levels approaching 2019, and said: "We're looking forward to a good New Year. The way it's looking now we're all feeling optimistic.
"Bahamians have been buying as well. Bahamians were buying all through the summer. Anyone with excess cash has been buying real estate. Obviously the big stuff is international, but the local market has been pretty solid all across the board. It's been able to weather the storm."
Mr Christie added that technology and online viewings have played a greater role for buyers and the wider real estate industry since the COVID-19 pandemic struck, with some purchasers willing to acquire "sight unseen" although most prefer to still physically view the property before agreeing a sales contract.
Bahamian tourism and real estate are heavily linked to stock market and housing valuations in the US, where the so-called 'wealth effect' encourages purchases and outlays by both high net worth and middle class individuals.