By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Downtown Nassau Partnership’s (DNP) co-chairman yesterday called for a “massive” tax-free zone to revitalise the area east of East Street, arguing that existing incentives “don’t go far enough”.

Charles Klonaris told Tribune Business that the Government needed to implement wide-ranging 10-year tax exemptions for a rundown location that has become the city’s ‘twilight zone’, with only Value-Added Tax (VAT) payable by businesses and property owners.

With the area’s current depressed state indicating that the Downtown Nassau Revitalisation Act is not sufficient to spark development, Mr Klonaris said the Bahamas still had a “golden opportunity” to improve both its tourism product and local economic ownership.

He disclosed that both the Government and private sector were awaiting the final plan for the proposed harbourfront boardwalk, which will extend from Woodes Rodgers Wharf in the west to Potter’s Cay.

“That should be ready any day now,” Mr Klonaris told Tribune Business. “In essence, the boardwalk plan has been approved by the Government. It’s really just the last drawings being approved. What we’ve seen already, we’ve approved. It looks very promising.”

The Nassau harbourfront boardwalk’s construction is viewed as another key step towards reviving the city of Nassau, and opening up the harbour and waterfront to tourists and residents alike.

Despite overlooking one of the world’s largest natural harbours, the Bahamas has to-date made little to no use of it as a tool for enhancing its tourism appeal, hence Mr Klonaris’s description of the boardwalk as “one of the most important” projects for downtown Nassau’s revival.

“The extension of the boardwalk is probably key to the revival of the waterfront, especially going east of East Street to the bridge,” he said.

“Hopefully with that we’ll get development from those stakeholders on the waterfront, and see more tourists as well as residents.

“The idea is to bring people back to live in the city. That’s the essence of creating a living city. If we want a 24-hour city, we need people living in it, otherwise we will have what happens now; everyone locks up at 5pm and drives to the suburbs.”

Mr Klonaris argued that both the Government and private sector then needed to build upon the boardwalk by working together to transform the rundown area east of East Street.

He called on the former to go further than existing incentives legislation by turning the area into a tax-free zone, in a bid to stimulate increased economic activity and attract new businesses.

“Between East Street and the bridge, that should be created as an incentive zone,” Mr Klonaris told Tribune Business.

“We have the Downtown Nassau Revitalisation Act in place now, but it does not go far enough to incentivise people to go into retailing and develop the properties that sit idle right now.

“It has to be on a massive scale in terms of incentives,” the DNP co-chair explained.”Ten years’ tax free and no real property tax for 10 years. The only tax paid would be VAT. The city will have to grow east; that would be my suggestion.”

So-called ‘tax free zone’ proposals have been criticised in recent months, with Opposition leader, Dr Hubert Minnis, coming under fire from within his own party for suggesting something similar for Over-the-Hill areas.

Senior figures in his own party criticised the plan, which has been suggested numerous times by politicians from both main parties, though it has never been put into effect.

The concern with such a plan, as offered by Mr Klonaris, is that property owners simply ‘pocket’ the tax breaks savings without engaging in any development activities, while anyone living in the area is forced out by higher costs.

However, Mr Klonaris said downtown Nassau’s revival had to be linked to a comprehensive review of this nation’s tax structure, which made it hard for Bahamians to compete in the type of retail businesses that Bay Street needs.

“In view of globalisation and what is taking place, the Bahamas is behind in recognising that if we are going to grow the retail industry, we are going to have to look at the tax structure,” he told Tribune Business.

“For some of the Bahamians wanting to get into retail, and be a success, they’re going to have difficulty competing because of the tax structure and the high cost of doing business here.

“If we don’t change the tax structure, we’re not going to have the retail growth necessary to bring people back downtown.”

The Bahamas’ current taxation regime, which is chiefly based on VAT and import duties, is largely-consumption based and raises living costs, making it difficult for local retailers to compete on price with their Florida-based rivals.

Still, Mr Klonaris said downtown Nassau offered the Bahamas a chance to move away from its reliance on foreign direct investment (FDI) for growth.

“Most of the development taking place right now is foreign,” he said. “If you look east of East Street to the bridge, that’s 100 per cent Bahamian owned.

“This is a great opportunity for Bahamians to become part of the redevelopment of this area. I think with incentives and the boardwalk, there is a good chance that area will be revived.”

Mr Klonaris, who has both owned a retail store and been a property developer in downtown Nassau, said a vibrant Bay Street was critical to improving the Bahamas’ tourism product.

“With competition, Cuba and the way people like to go travelling, it’s a very tough market, and what we see in terms of what we’re offering to tourists is not very much,” he added.

“The way we have more people living in downtown, the greater interaction and exchange of ideas between locals and tourists, there’s a golden opportunity in this area.

“It’s critical we have a living city. It’s part of the whole image of the tourism product and experience.”

Mr Klonaris said it was vital that visitors experienced Bahamian culture, and interacted with locals when in this nation.