• Hope Gov’t honours rebate at ‘third time’ of asking
• District ‘pressed brakes’ after collecting $900,000
• Model for Out Island autonomy if followed through
By NEIL HARTNELL
Tribune Business Editor
An Abaco district council is hoping “the third time” is a charm in persuading the Government to honour an agreement where it has “not got a dollar back” from unpaid taxes it has recovered.
Jeremy Sweeting, the Hope Town district’s chief councillor, told Tribune Business he and fellow councillors were now “cautiously optimistic” following a recent meeting with Ministry of Finance officials that they will finally receive a rebate on the collected tax arrears that could be as high as $60,000.
The officials, including Senator Michael Halkitis, minister of economic affairs, and Simon Wilson, the Ministry of Finance’s financial secretary, had “promised to come through” after Mr Sweeting warned that the council - in the absence of any progress - would seek legal advice over enforcing a legally binding agreement that could act as a model for financing Out Island community needs.
He confirmed that Hope Town had “pressed the brakes” on the deal after just one year due to the Government failing to fulfill its side of the bargain, which was to return between 2-10 percent of any real property tax arrears collected within its jurisdiction for use in financing projects that would benefit the local community.
Revealing that some $900,000 in real property taxes, of which almost $600,000 was past due, had been collected from foreign property owners, including wealthy second home buyers, in that year, Mr Sweeting said the agreement could provide a template for the decentralisation of Bahamian governance and greater self-determination for the Out Islands if followed through.
For, looking beyond real property taxes, Hope Town’s chief councillor said the recent Ministry of Finance discussions had also focused on how local government could assist with collecting other taxes such as docking fees and mooring fees on Abaco’s cays - now reviving after Hurricane Dorian and COVID - that were rarely visited by the collection agencies.
Mr Sweeting recalled how the initiative began more than six years on February 12, 2015, when a Hope Town delegation met with the then-Christie administration. The group, which included himself and two-three council members, as well as realtors and property managers, had a proposal for tackling the collection, valuation and assessment challenges with real property tax.
“Local government made the argument that said: ‘We’re on the ground, we know everybody on a personal basis, the second homeowners that pay property tax, and with our statutory authority as the local planning authority we accept applications for building permits’,” Mr Sweeting said. “They have to declare the value of construction.
“We have a general understanding of the situation, we could be a big help, and we’d offer to help with real property tax collection if we could retain a percentage. That was the proposal. We went back and forth on it.”
The then-administration warmed to the idea, with former prime minister, Perry Christie, informing Parliament while unveiling that year’s Budget that changes to the Local Government Act would empower certain local councils to collect real property taxes on Nassau’s behalf while retaining “a share of the proceeds” to fund capital improvements in their areas.
The amendments to that Act gave local government the powers of the Chief Valuation Officer to collect real property taxes in their areas, using the tax roll provided by central government. However, it was not as simple as just passing legislation.
Mr Sweeting said Hope Town District Council, after enactment of the Act, still had to negotiate “a legally binding agreement” to perform these functions with the Ministry of Finance. The latter drafted the deal, which both parties signed.
“The big initiative was we’d get back a percentage of the arrears we collect up to 10 percent,” he added. “We argued we needed a floor. We finally came to 2 percent. Anywhere between 2-10 percent, we agreed to that.”
The only problem is that Hope Town has still to receive one cent in rebate despite collecting thousands of dollars between February 1, 2017, and end-January 2018. “After 12 months we did not get a dollar back,” Mr Sweeting told Tribune Business. “We pressed the brakes on the whole initiative.
“We were exhausting a lot of time, energy and resources, and not seeing anything come back under the agreement. We had a meeting with the Christie administration after we started collecting taxes, and did not get a rebate; we met with the Minnis administration, and did not get a rebate, and now we’re coming for the third time to get a rebate.
“When we left the meeting [with the Davis administration’s Ministry of Finance], we everybody attending felt confident it would work this time. Me personally, I’m cautiously optimistic because I’ve seen this movie before.”
Reiterating that it was a legally-binding deal, and not just a gentleman’s agreement or handshake, Mr Sweeting added: “We also reminded them, and I don’t want to sound harsh; they could sense the frustration.
“But this has been going on for six years. This is the third administration. I said they may find, should there not be any progress seen in several months, that the district council may seek a private attorney and see what its options are because this is a legally binding agreement. They promised to come through, and our guys felt very confident coming out of the meeting. We’ll see.”
Mr Sweeting said that, at the agreement’s outset, he “gave a charge” to all council members to ensure all due and outstanding real property taxes were collected in their townships. “I basically took ownership of this programme in the first year to prove it could work, and tried hard,” he added. “In my township, Man O’ War, we collected 74 percent of the district’s total.”
While Bahamian-owned property in the Family Islands is currently real property tax exempt, the Hope Town chief councillor said he believed the district’s tax generating potential is far greater than what was collected.
“We knew these people personally,” he added of overseas real estate owners. “We were calling them in through phone calls, saying ‘Mr So and So’, we want to get get property taxes up in the district because a certain percentage comes back to town.
“That personal touch, those personal phone calls, make the difference and we know people on a personal basis. We go to the same churches, the same grocery stores and see them on the road, passing them in golf carts. We collected about $900,000 in property taxes, and almost $600,000 of that was taxes in arrears.”
Acknowledging that the Minnis administration may have been distracted by COVID-19 and Dorian, Mr Sweeting said a rebate paid to Hope Town District Council every three months had been discussed initially.
Based on the $600,000 arrears, a maximum of $60,000 - and minimum of $12,000 - is owing under the agreement. Pledging that these funds would be handled in a “fully transparent” manner, and come through the administrator’s office to ensure tracing and accountability, he added that the monies would assist with the likes of public dock, school and post office repairs plus road patching.
“Something we also discussed and expanded upon was there’s a lot of uncollected taxes because these agencies and departments don’t come to the cays,” Mr Sweeting said. “Dock fees, mooring fees, we told them we could go in and help them.
“We know about the docks and properties in our community, and will collect from them. Central government still wins at the end of the day because they get revenue they were not getting anyway. That’s being discussed and we’re hoping it comes to fruition.”
Pointing out that the Local Government Act change applies not just to Hope Town, but islands such as Exuma and other local government areas in Abaco, Mr Sweeting said the agreement they are seeking to enforce could provide a model for giving Family Islands more control over their affairs as they have “a better grasp” of their own community’s needs than Nassau.