• But wants to make Exuma ‘hemipshere’s boating capital’
• Pledges regulatory crackdown on vacation and car rentals
• Optimistic ‘Wild, Wild West’ in Exuma Cays nearing end
By NEIL HARTNELL
Tribune Business Editor
The deputy prime minister yesterday unveiled ambitions to make Exuma “the yachting capital of the hemisphere” despite branding taxes yielded by the sector as “unconscionably” low.
Chester Cooper, also minister of tourism, investments and aviation, told the Exuma Business Outlook conference that The Bahamas was only “scratching the tip of the iceberg” when it came to the high-end boating/yachting industry’s economic impact and it needed to “tap this more deeply”.
Yet, speaking just ahead of his attendance at the Fort Lauderdale Boat Show, one of the sector’s main annual trade shows, he also suggested that the $300 cruising permit and 4 percent yacht charter fee levied by the Government were too low and that there needed to be greater “equity” in terms of its tax contribution to the Public Treasury.
Mr Cooper voiced similar sentiments about vacation rentals, which he asserted must be “more closely monitored and regulated”, while also pledging to crack down on “unfair” competition provided by unlicensed car and boat rental businesses that he indicated were operated by foreigners.
And he expressed hope that new vessels provided to the Port and Fisheries departments, respectively, will enable the authorities to finally gain control of what he described as a “Wild, Wild West” in the Exuma Cays when it came to environmental and natural resources protection - something he has been complaining about for ten years prior to becoming Exuma’s MP.
“I want to tell you that it’s the intent of the Davis/Cooper administration to look more closely at vacation rentals, and more closely monitor and regulate vacation rentals on the island of Exuma and throughout the country for that matter,” Mr Cooper told the Outlook conference.
“We plan to have registration and inspections of vacation rental properties for the safety of our guests, and protection of the product and destination.” He added that the Ministry of Tourism had tasked the Hotel Licensing Department to “build out regulations for this and the framework” to facilitate it as rapidly as possible.
Acknowledging that taxation-related matters require a Cabinet decision, Mr Cooper said: “I will recommend that VAT be required on vacation rentals. As it stands, hotels pay taxes on rooms; vacation rentals don’t.”
Implying that this was unfair, especially since many vacation rentals were owned by foreign second homeowners, who “we welcome and love”, but are only resident for a small portion of the year, he added: “Many of them are competing with hotels, sometimes with the benefit of government marketing and infrastructure spend, and sometimes with concessions, but not paying much VAT to the Treasury.”
However, the situation described by Mr Cooper was supposed to have been addressed by the Minnis administration in the original 2021-2022 Budget passed by the previous Parliament in June. It sought to extract an extra $31m annually from the vacation rental market by “levelling the playing field” as it related to taxation.
The VAT Act was changed to make clear to Airbnb and its competitors that taxes must be levied “on the full value of the rental”, rather than just the commission paid to their platforms. “We are amending the law to clarify that all vacation home marketplaces, such as Airbnb and VRBO, are required to pay VAT on rentals and commissions,” ex-prime minister, Dr Hubert Minnis, said.
Meanwhile, Mr Cooper also pledged to clean up car and boat rentals as part of his drive to ensure all taxpayers “render unto Caesar what is due to Caesar”. He added: “We also plan to regulate activities like car rentals and boat rentals”, noting that such sectors are supposed to be reserved for Bahamian ownership only and “subject to strict licensing”.
“We must ensure that Exuma entrepreneurs do not face unfair, unlicensed competition,” the deputy prime minister said. “We hear this a lot, and are going to do something about it. We welcome our friends from different countries, but fair is fair.
“Render unto Caesar what is due to Caesar. We need our share to help build the roads, docks, bridges and airports that we all complain about.” Then, turning to the boating and yachting sector, Mr Cooper added: “In the same vein, we will also look to see how we can benefit more from the charters in the cruise business who use our natural environments for big profits, and we welcome them.
“But it’s just unconscionable that cruising permits are $300 and the charter fee is 4 percent of whatever the charter is going for. I rent... Pedro rents his super yacht for $25,000 a day, and we only get a minimum 4 percent and $300 cruising permit fee.
“He happens to have come through our waters on his mega yacht to enjoy the Exuma Cays, use our resources and infrastructure. We welcome that, but there has to be equity in my view. I’m speaking not just as minister of tourism, as we recognise the economic impact of their activities, but we must balance the approach we take as a country to ensure maximum economic benefits.”
Mr Cooper’s comments will likely be warmly welcomed by Bahamian tour and excursion providers who have long advocated a taxation level playing field with foreign yacht charters. Collection of the permits and charter fee has also been a long-standing problem, although the recent introduction of online payment portals is expected to impact that.
The former Minnis administration also looked at this area, and Tribune Business archives indicate it believed it could generate between $20m-$50m in extra revenue from fully collecting all due cruising permit and yacht charter fees.
Mr Cooper yesterday indicated the Ministry of Tourism had collected $43m in charter fees for calendar 2021 to-date “based on submissions”, together with $1.7m in cruising permit fees. With the global yachting/boating industry’s value set to climb from $22bn in 2017 to $35bn by 2026, he added that it was a market his ministry will pursue.
“There is great potential in the cruise and charter market,” the deputy prime minister said. “We are going to grow that business..... We’re going to expand this because it’s good business and been recession-proof. Even during the pandemic we were still able to attract many yachts and boats to The Bahamas.
“This is a good target market for us. It’s a high-end market and I’d like to build-out Exuma as the yachting capital of the hemisphere. I hope we will tap this market more deeply, and get more benefits from this industry. I only think we’re touching the tip of the iceberg.”
Mr Cooper, meanwhile, added that the Fisheries Department’s new vessel was “not just lip service” as he had actually seen it, while that for the Port Department was also on its way. “I have often complained that the Exuma cays was the Wild, Wild West,” he added.
“And I’ve always advocated that we need a joint enforcement unit of Immigration, the police, Port Department and Fisheries to make sure we are balancing economic growth with the protection of our resources and protection of our environment. I’ve complained about it for ten years.”