By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known QC has called for legal reforms that would allow bailiffs to seize and sell-off real estate owned by property tax defaulters, otherwise evasion will remain “a nut we can’t crack”.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that just attaching liens to property owned by non-payers had proven ineffectual as a tool to encourage compliance, as shown by an outstanding $550 million real property tax bill.

Advocating a ‘get tough’ approach with real property tax defaulters, Mr Smith added that the Government needed to adopt a ‘first world’ approach by enacting laws to enforce and collect monies it was owed.

“We should amend the Real Property Tax Act to allow bailiffs to go to court, and to publicly sell and auction off property upon which real property tax is owed, rather than just attach liens to it,” Mr Smith told Tribune Business.

“In other jurisdictions, they sell off the property to pay the arrears. In the Budget we have a $550 million outstanding real property tax bill, which is a nut we can’t crack because we can’t collect it.”

Returning to his call for the Bahamas to implement a 17-19 per cent income tax on middle and high income earners, rather than a Value-Added Tax (VAT), Mr Smith said one advantage of adopting his idea would be a likely reduction in the tax breaks/incentives given to foreign investors.

“By becoming tax competitive with other jurisdictions, we would encourage foreign investment and might not have to give away Customs Duty, Stamp Duty and real property taxes that we always hold out as carrots in these pernicious, and self-defeating, Heads of Agreements,” the Callenders & Co partner said.

“It would claw back attempts to encourage foreign investment by tax breaks for these anchor projects.”

Mr Smith added that investors and second home purchasers were attracted to the Bahamas by other qualities than merely tax incentives. And he called upon the Government to stop “giving the Bahamas away for free” in its negotiations with foreign investors.

“They come anyway, because of the intrinsic attraction and beauty of the location to build their homes, plus boating and swimming in the pristine and natural waters,” he said. “That is why they come. They do not come for tax breaks.

“Anyone paying $5 million for a beachfront lot at Baker’s Bay, or $30 million for a condominium at Albany, can afford to pay real property tax.”

Reiterating that rich Bahamians and foreigners alike had an obligation to contribute to the wider society through paying their taxes, Mr Smith said: “I recognise the importance of making a proportionate and fair contribution to the tax base.

“Anyone who philosophically promotes otherwise is just being a scrooge. More to the point, if we did have an income tax we could encourage foreign developers. They would not be subject to double taxation, and the Bahamas would not be regarded as a little pirate, tax dodging banana republic.

“By stepping into the 21st century with a modern system of taxation, we can better the Bahamas all round.”