By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Democratic National Alliance’s (DNA) leader yesterday said Bahamian small businesses and consumers had been “stabbed in the back” by the total VAT exemption granted for Baha Mar’s construction completion.

Branville McCartney said the tax incentives granted to China Construction America (CCA) and its sub-contractors continued a trend where foreign investors received preferential treatment, while Bahamian-owned firms were “suffering no end”.

Calling on the Government to confirm whether it would offer similar tax breaks to Bahamian companies, the Opposition’s Senate leader said the Baha Mar revelation had come at an especially bleak moment for the local private sector.

Apart from having to complete VAT filings and payments a week earlier this month, by the 21st, Mr McCartney said he had yesterday been advised by his accountants that his various companies had to pay their annual Business License fees by month’s end.

The Government modified this requirement last year, giving companies until end-March to make the actual Business License payment, while still demanding the actual returns by January’s close. Mr McCartney, though, said Bahamian businesses were effectively “working to pay the Government’s taxes’.

He added that it was especially ‘“amazing” that Bahamians had to learn of the blanket VAT waiver for Baha Mar’s construction completion via a leaked CCA e-mail, rather than from their own Government.

Arguing that “accountability and transparency is out the window with this Government”, Mr McCartney said: “For this government to give this type of concession, are they willing to give the same to small businesses in this country, which are the backbone of any society?

“Are they willing to give the same dollar amount to Bahamians that they gave to the Chinese? Bahamian businesses, and Bahamians across the board, should feel they’ve been stabbed in the back, so to speak, and kicked in the rear end by this government which campaigned on ‘believing in Bahamians’. They don’t believe in Bahamians; they believe in the Chinese.”

The Government will likely retort that Bahamians, and its political opponents, need to focus on ‘the bigger picture’, which is the need to complete the $3.5 billion Baha Mar project’s completion and opening.

Its position is that the economic benefits stemming from the direct employment of thousands of Bahamians, and the foreign currency inflows generated from hundreds of new visitors to this nation, will more than offset any tax revenues foregone to ensure Baha Mar’s completion.

When asked whether he, and others, were ignoring a potential annual GDP expansion estimated at hundreds of millions of dollars, Mr McCartney replied: “We always want Bahamians to be employed and an increase in economic activity, but at what cost?

“We don’t know all the details surrounding this. What has the Government given away? We can’t answer that. We don’t know the extent of what they’ve done.”

The ‘Heads of Terms’ between the Government and the China Export-Import Bank, which cover the Baha Mar construction completion agreement, have been ‘sealed’ and ordered to remain confidential by the Supreme Court.

As a result, it is impossible for anyone to fairly judge whether the Christie administration has struck ‘a good deal’ for Baha Mar’s completion and opening, and whether the Bahamian people are likely to receive ‘value for money’ in terms of the tax breaks granted.

Mr McCartney, meanwhile, questioned what other incentives had been provided to CCA and the China Export-Import Bank, asking whether the Government had granted Chinese requests for 500 economic citizenships.

Prime Minister Perry Christie previously confirmed this has been requested, but said his government had rejected such demands. The DNA leader also asked how many work permits had been granted to Chinese to work on Baha Mar “at the expense of Bahamians”.

He then suggested that the VAT exemption was especially galling for Bahamian businesses and consumers, who were the ones having to pay the 7.5 per cent levy and, in the former’s case, administer and collect it on the Government’s behalf.

“On the 21st of this month, most businesses will have to pay VAT and get ready to pay Business Licenses,” Mr McCartney told Tribune Business.

“Do you know what that’s going to do to small businesses in this country, who are already running on exhaust fumes?”

When challenged on whether the end-January deadline for Business License fee payments was still accurate, Mr McCartney replied: “My accountants told me, and I had a meeting with them this morning, that VAT and Business License fees are due this month. That’s the law firm and the pharmacy, and I know what that’s going to do.

“January is one of the slowest months of the year, together with September, and because of the payment of all these taxes it’s going to put a big strain on businesses.

“They are going to have to find money that is not there because people don’t have money to spend in this economy, yet this government is giving away hundreds of millions of dollars to the Chinese.

“The only people suffering are the Bahamians. I’m talking from experience. My businesses, for the most part, have been relatively OK, but I can imagine otherwise.”

Strictly speaking, VAT should not impose financial hardship on registrants, given that the tax is paid by consumers, with businesses simply administering it and passing it on to the Government.

Credits and refunds are available to companies when ‘input’ VAT exceeds the tax payable on their outputs. Business Licenses, which are levied on a business’s gross turnover, are a different matter, and can create cash flow problems and other hardships.

“If we don’t pay they’re going to prosecute us and close us down,” Mr McCartney said, “yet the Government allows these Chinese entities to come in VAT free.

“The small businesses in this country are suffering. That cannot be right, man, that cannot be right. That cannot be fair. You’re going to kick the backbone of this society in the backside, and allow these monies to go by the wayside.”