• Says inflexible approach harms growth, productivity
• Argues 'don't close the business; talk brings results'
• 'Notional' Business Licence and contract deductions
By Fay Simmons
Tribune Business Reporter
The Prime Minister yesterday slammed "blinkered" public officials for adopting inflexible approaches to the collection of outstanding taxes that "close the business" and hinder economic growth and productivity.
Philip Davis KC, addressing the Cat Island Business Outlook conference, said civil servants too often adopted a "'well pay me first' attitude" to the issuance of Business Licences, and signing of public works contracts, when the company involved owes tax liabilities to the Public Treasury.
Rather than refuse to issue a Business Licence, he argued that officials should instead discuss the outstanding arrears with the tax-paying business because "talk will bring results". And, if tax delinquent businesses were due to be awarded government contracts, Mr Davis argued that the sum owed should merely be deducted from the value of the work to be undertaken.
Addressing the ease of doing business, Mr Davis said: “As minister of finance. I continue to look at ways to improve the ease of doing business. One possibility, and I speak to some of the challenges, is that we allow Business Licence applicants to receive a notional licence until their Business Licence can be formalised.
“If one applies for licence renewal, for example, and the application is tied to whether one's taxes are current or not, I want to address that issue to make the process more conducive to commercial activity. So if there's a question about what is owed, either in your National Insurance contributions or real property tax or your Business Licence fees, then talk about it but don't close the business or not issue the licence.
"Talk about it because talk will bring results, and that is what we are encouraging. But somehow public servants are blinkered and don’t see beyond that." Mr Davis then cited the example of public works being delayed because the contractor was unable to produce the necessary Tax Compliance Certificate (TCC) to show all taxes due and owing to the Government have been paid and are up-to-date.
“An individual, for instance, might win a government contract, but to get the contract signed so that they could be mobilised and moving along, they're required to produce a tax certificate to show they are in compliance with all of their taxes," the Prime Minister said.
“The individual may owe real property tax and National Insurance. Right? He may owe those things, but if we work and think as a business person, you will determine that we will sign the contract and deduct what is owed to us from the contract sum. But, very often, there’s this attitude 'well ,pay me first and then you continue' but it holds up productivity, it holds up growth and so many things likewise are slowed up.”
Mr Davis' seemingly 'soft touch' approach to tax delinquents, and collecting arrears, contrasts sharply with the much tougher approach taken by the Ministry of Finance and Department of Inland Revenue - both agencies for which he has ministerial responsibility - since April.
Besides placing a hold on the bank accounts of companies that have failed to remit VAT to the Government, and in some cases garnishing these facilities and removing the sums owed, the Department of Inland Revenue has also warned it will exercise its 'power of sale' in "extreme cases where property owners have failed to make real property tax payments for between 10-20 years and have ignored all outreach to bring their accounts current.
The Prime Minister's comments yesterday potentially send mixed messages as to the Government's approach in dealing with tax cheats and dodgers. However, Mr Davis yesterday also acknowledged that the availability, reliability and affordability of broadband Internet services and mobile data remain challenges to economic competitiveness on the Family Islands.
“The ease of doing business creates the environment for conducive investments. Residents here are no strangers to vexing connectivity challenges, which have the counterintuitive effect of causing digitisation to become a hindrance to business and productivity," he added.
"We opened a passport office here this year, and residents also have access to the Registrar [General']s department for registers of births and deaths, the Government's portal for Business Licences and Customs Department's portal. All those things are in place. However, connectivity and system issues continue to derail the improvements intended via these resources.
"These are issues we are working to rectify as the global push towards digitisation continues. We remain determined to ensure we bring all Bahamians along with us. We can keep pace with digital transformation and still leave room for the analog environment in which many Bahamians are so intimately familiar and slow to let go.”
Reiterating that "I am an island boy", Mr Davis said the growth and development of all Family Islands was central to his government's plans. "Family Island development is key to national development, and we are committed on both fronts," he added. "I am not Nassau centric...
"I think the future of The Bahamas lies in the Family Islands, but done in a way that it does not disrupt our culture and essence or ethos of who we are... We'll see as time goes on our rich and vibrant cultural heritage, coupled with infrastructural upgrades, necessary improvements to the delivery of government services and relatively safe communities, make our Family Islands ideal places to live, visit and invest....
"My government is determined to foster such progress, and to give Cat Island, San Salvador and Rum Cay the quality of life and development you deserve." The Prime Minister, responding to audience questions, said he had been advised that The Bahamas' territory covers 160,000 square miles rather than the traditionally-accepted 100,000 square miles as a result of the seagrass mapping exercise being carried out to enable this nation to monetise carbon credits.
He reiterated previous warnings that "all of us will be doomed to a watery grave or become climate refugees" due to sea level rise and global warming, especially as 80 percent of The Bahamas' land mass is less than three metres above sea level, while repeating pleas for industrialised nations to "get to grips" with climate change.
Mr Davis also confirmed that "one or two cruise lines have been making inquiries of me to determine if they could have port or bring in their cruise ships" to locations in his Cat Island, Rum Cay and San Salvador constituency. Royal Caribbean recently confirmed it had scouted out a location in Rum Cay but Michael Bayley, its president and chief executive, cautioned against reading too much into this development.