Wednesday, July 11, 2018
A prominent realtor has renewed his call for The Bahamas to introduce economic citizenship, arguing it will create a new revenue source and lessen the tax burden on Bahamians.
Mario Carey, the founder of Better Homes and Gardens Real Estate MCR Bahamas Group, says such a programme should target top-end investors by mandating that they make a sizeable investment in an approved Family Island project in order to qualify for a Bahamian passport.
"The formula I'm proposing is a two-step process. The investor purchases land or a residence, that's the first part, and secondly, they contribute funds to a specially-created fund that provides for three specific needs - hurricane and disaster relief and recovery; national development; and the National Health Fund," said Mr Carey.
"These figures could be adjusted in a further discussion, but I would recommend considering a $750,000 purchase and a minimum contribution of $1m to the fund, which lies outside the Consolidated Fund."
Mr Carey suggests a minimal time frame for an investor to be present on the Bahamian island of their choice also be considered. "The investor would be required to spend at least 90 days in The Bahamas annually, demonstrate that their presence is resulting in additional employment, and would not be able to sell their property for at least five years without an appeal in extenuating circumstances," he said.
"Again, I think it is really important to stress that this would apply only to approved projects or purchases in the Family Islands, and could be the economic shot in the arm they need, helping to stem the tide of people turning to Nassau for jobs.
"It could lead to better education, improved healthcare and other positive outcomes for Family Islands. Based on other countries' experiences, we would not be likely to attract more than 350-400 persons per year, a number the country could easily absorb and should readily welcome."
Countries around the world - including the US, UK, Canada and Australia - have adopted various forms of economic citizenship programmes. But the concept has proven especially popular in the Caribbean, where several countries have used investor funds to recover from the devastation of hurricanes and other natural disasters.
"The objective is not to compete with St Kitts, Barbados and Grenada, where for less than half a million dollars an investor could purchase citizenship," Mr Carey said. "The Bahamas can command more."
Antigua and Barbuda, St Lucia, Dominica, St Kitts and Nevis and Grenada all offer economic citizenship which could come in one of three ways: A financial contribution to a national development fund, real estate investment, or by establishing a business. For most nations, paying into the fund offers the cheapest route, although residency requirements sometimes apply. Processing time for the region takes three months on average.
The most popular entry into Antigua's citizenship by investment programme is a $100,000 investment in the National Development Fund for a family of four, with an associated fee of $25,000. That figures jump to $200,000 for citizenship in Grenada and Dominica, not including additional expenses.
St Kitts and Nevis is the world's first citizenship by investment programme. Foreigners must invest into the Sustainable Growth Fund - $150,000 for a single applicant, and $195,000 for a family of four. Last September, St Kitts allowed investors to gain citizenship by donating $150,000 to the Hurricane Relief Fund. That initiative expired in March.
Although St Kitts and Nevis has been offering its programme since 1984, to-date only 11,000 foreign investors have become Kittitans, an average of 324 per year.
Mr Carey said the scale of The Bahamas' fiscal crisis, with a national debt of $7.8bn and debt-to-GDP ratio of 67.8 percent, means it has no choice but to explore alternative revenue-raising mechanisms such as an economic citizenship programme.
"The Bahamas has dug itself into a deep financial hole. Even if we were now to live within our means and utilize the VAT increase to pay down debt, we would still find ourselves in a financial bind for years and years to come," he argued.
"What we need now is new money, a new source of revenue as opposed to borrowed funds and our heavy reliance on tourism and financial services... The government has to decide whether it wants to continue hitting the pockets of the Bahamian people for money that is simply not there, or raise revenue in the least economically harmful manner, through an Economic Citizenship Programme.
"There may be pushback from an emotional standpoint, but from where I sit, it is essential that we collect more dollars to improve our aging infrastructure and essential government services such as health and education. A well-constructed Economic Citizenship Programme will generate economic growth."
Brent Symonette, minister of financial services, trade and industry and Immigration, last year told Tribune Business that the Minnis administration presently has no plans to look at implementing an investor citizenship programme. He said the government was instead focused on ensuring permanent residency applications are "expedited".
So-called "investor citizenship" programmes have been mulled and floated in the past, most recently by Sean McWeeney QC, a former attorney general and key advisor to ex-premier Perry Christie. The idea was ultimately ruled out by the former administration, with ex-financial services minister, Hope Strachan, stating such an initiative was "not so palatable" in the current environment.
It would have eventually granted citizenship to a limited group of individuals, once they met certain criteria, including a high multi-million dollar investment threshold. Those qualifying for such a programme would essentially have to invest in Bahamas-based developments and companies that created local jobs, but Mr McWeeney's proposal drew a mixed reaction from the Bahamian private sector in mid-2014.
Concerns have been raised over the transparency and accountability surrounding such investor/economic citizenship programmes, which have also drawn the attention of regulators and law enforcement agencies in nations such as the US on the grounds that citizenship is being "bought".
For a high net worth individual (HNWI), a second citizenship in the right jurisdiction can improve financial security through strategic tax planning opportunities. For those hailing from a less politically or economically stable region, an alternate passport provides a sense of security along with an escape route in order to avoid political persecution or conflict in war-torn areas. The right passports provide visa-free entry into well over 100 countries.
In the case of the US, economic citizenship is possible through the EB-5 Green Card by Investment Programme. It requires the foreign entrepreneur to invest anywhere from $500,000 to $1m with evidence that the investment capital was obtained by lawful means. The investor has to live in the US as a permanent resident for a minimum of five years.
In Canada, the path to economic citizenship comes through the Quebec Immigrant Investor Program (QIIP), which caps the amount of applications it receives annually to just under 2,000 applicants. Foreign investors must have a legally obtained minimum net worth of CAD $1.6m, and have to reside in Canada as a permanent resident for at least three years.
In the UK, investors with at least £2m in investment funds can apply for economic citizenship via a tier one investor visa. And in Australia, economic citizenship is attainable through the country's investment-based, three-step immigration process for obtaining citizenship. The investor must possess a net value of at least $600,000A.