By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to rapidly defuse the “ticking timebomb” that is Freeport’s expiring tax breaks, a well-known businessman warning that the city’s private sector is “stuck in limbo” until it acts.

Larry Albury, Freeport Jetwash’s general manager, told Tribune Business that by continually delaying its decision until the bitter end, the Government was deterring fresh investment into the city by both new and existing enterprises.

The Christie administration has again let the clock wind down, much as it did last summer, with just over a week left before Freeport’s real property, income and capital gains tax exemptions expire on February 5, 2016.

Mr Albury questioned whether the Government realised how much Freeport was “hurting” in the absence of decisive action over these incentives, as it created “a vicious circle” that discouraged business expansion and job creation.

He added that too many Freeport-based businesses were acting as “charities”, losing money as they kept staff employed, with some companies already discussing Grand Bahama exit strategies.

“What I don’t understand is that they keep letting it go and go,” Mr Albury told Tribune Business of the absence of any decision on Freeport’s tax exemptions, “and it’s only hurting Freeport.

“The longer we leave something like this, the more investors are going to stay out, and existing investors will invest no more.

“It’s a vicious circle. The longer you leave your answer, the more investors are discouraged, and Freeport needs all the help it can get. It makes you stop and think: Where are we going in Freeport, and what is the answer?’”

Placing the wait for a Government decision in context, Mr Albury added: “The longer they leave this timebomb ticking before they definitely get someone to push the button, and prevent its self-destruction, is quite amazing.

“I hear people talking about strategies to leave the island. I wonder if we’re ever going to get an answer, either yes or no.”

Most observers believe that the Government has little choice but to renew Freeport’s expiring investment incentives, although it will likely attach commitments and terms that other parties must fulfill.

The renewal is likely because the largest private investor in Freeport, Hutchison Whampoa, has already told the Government that it will not commit to further investment in the city until it has certainty that the expiring investment incentives will be renewed.

The Christie administration is pushing hard for Hutchison and its partner, Mediterranean Shipping Company (MSC), to initiate the $250-$300 million Phase V expansion at the Freeport Container Port, and will realise it needs to ‘trade off’ the incentive renewal in order for this to proceed.

Tribune Business understands the Prime Minister is driving for a ‘one-time’ solution that achieves all the Government’s objectives for Freeport, which include the Grand Bahama Port Authority’s (GBPA) sale to new investors and the return of its quasi-governmental powers to Nassau.

Sources familiar with developments have suggested the Government’s pace in relation to Freeport has quickened in recent weeks, and a possible breakthrough - including the announcement of a decision on the expiring incentives - could soon be forthcoming.

The Christie administration will likely seek specific development commitments and timelines from the likes of the Grand Bahama Development Company (DevCo) in return for agreeing to extend the investment incentives.

Its approach will have been encouraged by McKinsey, its international consultants, whose findings effectively make it imperative that the Government extend those incentives if Freeport is to remain a viable and sustainable economy.

Tribune Business exclusively revealed last week how McKinsey had warned the Christie administration that up to 1,100 jobs could be lost in Freeport if it were to ‘trade off’ employment for $80-$100 million in extra revenue generated by allowing those incentives to ‘sunset’.

Mr Albury yesterday summed up the conclusions from the McKinsey report thus: “They’d better leave it alone and let Freeport continue the way it is.

“I don’t see how they’re going to make Freeport pay taxes when we already pay the Grand Bahama Port Authority licence fees and service charges, and land taxes.

“There’s no way people are going to make it. Some people around town are still running generators. It’s not hard to find a lot of people still hurting,” he added.

“For the middle and lower classes, it’s been a year with VAT, and some of them are finding it hard to get the money they need.”

Mr Albury warned that allowing the incentives to expire, which could potentially lead to ‘double taxation’ on real estate, will also “put more strain on businesses”.

“The idea of being in business is to make money, not be a charitable organisation,” he told Tribune Business, warning that an increased tax burden would lead to further closures and lay-offs.

The Freeport Jetwash chief also said it would be “a scary situation” should Nassau assume responsibility for Freeport’s governance and regulation from the GBPA, as the Government has given every indication it wants to do.

Mr Albury expressed concern that Freeport residents would see their ‘quality of life’ deteriorate, based on how the Government has managed the rest of the Bahamas, with efficient public services - such as timely garbage collection - becoming a thing of the past.

“We need an answer to move on with our lives,” he told Tribune Business. “We need an answer for investors to be comfortable after February 5, whatever the decision is, so people will look at investing in Freeport again.

“We have children, we have businesses, so we need to know where we’re going. We’re in limbo, which is not a nice condition to live in.

“I hope and pray the right decision is made. There are Bahamians caught in this limbo, and we need to move on.”