Dorian Recovery Zones may be facing disaster

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Gregory Laroda

By YOURI KEMP

Tribune Business Reporter

The Grand Bahama Chamber of Commerce has slammed the confusion surrounding how the post-Dorian Economic Recovery Zones and their tax breaks, which took effect yesterday, will work.

Greg LaRoda, the GB Chamber’s president, in a statement sent to Tribune Business warned that “most businesses” on the island have not been informed as to how the VAT and import tariff/Excise tax concessions will be implemented.

He added that the island’s private sector, where “at least” 11 percent of businesses are not planning to re-open following Dorian, had received no “confirmation” on which tariff headings will be impacted by the central element to the government’s restoration and recovery effort just three days ahead of implementation.

Mr LaRoda also revealed that the island’s Department of Inland Revenue unit had been of little help as it had yet to be advised by its Nassau headquarters of what was happening.

“Local businesses were told of the VAT concession via the media, and it was announced that it would be implemented on December 1 to give local businesses time to adjust their systems,” he said.

“However, most businesses have not been engaged ... and there have not been any announcement or confirmations on exactly which tariff headings will be impacted, what specific goods will be VAT free and what the specific reporting responsibilities will be for businesses in Grand Bahama as of November 28, 2019.

“Businesses have been calling the Department of Inland Revenue locally and could get no direction from them as they had not yet been advised of such.”

Persons and businesses resident on Grand Bahama and Abaco, the two islands ravaged by Dorian, are supposed to enjoy the tax-free importation of goods through until end-June 2020 to facilitate their recovery once they can prove they are located there.

However, one private sector source speaking on condition of anonymity said it was “as clear as mud” how the promised tax breaks will work in practice because they have not been based on the Tariff Code.

They explained that rather than go line-by-line through the established tariff headings and determining which should be exempted from import taxes/VAT at both the border and point-of-sale, the Government appeared to be basing its waivers on broadly-defined categories of goods.

This, the source added, meant that apart from including items that the Government did not necessarily want designated ‘tax free’, it would be impossible for businesses to break-out VAT from import tariffs when adjusting computer systems for the concessions.

And, with consumers in the disaster-hit areas already expecting to enjoy VAT-free and duty-free prices, they added that the confusion threatened to leave many businesses in trouble with their customers.

“A month ago, when they first conceived of the VAT-free situation, it’s got to be done by tariff code,” they told Tribune Business. “These categories of goods are too big, and I’m sure there are specific things in these categories that they do not intend to be tax-free.

“It is the business community that is the final implementation team, and they have not been consulted. Quite honestly, the business community in Freeport is sitting with their arms up in the air. How are they supposed to calculate it? It’s as clear as mud, and with all the confused reports coming out of Customs and Inland Revenue, it’s going to be mayhem in Freeport.

“The public has the perception that everything is duty and VAT-free... The real issue is the public are going into these shops demanding VAT and duty-free, and in a lot of cases they can’t do it. It’s obvious they don’t know what they’re doing and are making it up as they go along. If they’d consulted businesses who knew what to do, they could sort it out and make it simple for them.”

Tribune Business was informed that a seminar to inform the private sector on the Economic Recovery Zones and how they will work has been scheduled for tomorrow in Freeport at the GB Chamber, some two days after they came into effect.

The source suggested that the regimes and tax breaks had been designed to ensure merchants in Nassau, through where most goods destined for Abaco pass through, were involved in the recovery effort and bypassed by businesses and homeowners importing materials directly from abroad.

Mr LaRoda, meanwhile, also said that with the Government’s fourth Dorian exigency order expiring on Saturday “no replacements or direction have been given to businesses or households with damage needing those concessions – nor to businesses processing such sales” - even though thousands were impacted.

With a GB Chamber survey revealing that 64 percent of Dorian-damaged businesses lacked insurance, and 22 percent of staff employed by those companies no longer in a job, he added that the island’s private sector and economy were facing “a very serious picture”.

Pointing out that collaboration between the Government, Grand Bahama Port Authority (GBPA) and private sector was key, Mr LaRoda said: “We are not clear on some of the most critical pieces that affect businesses and the community at large. And, unfortunately, we are not receiving communication, information nor responses to our requests for communication and clarity.”

He added that the GB Chamber was “strongly advocating for” regular updates from the GBPA, as city manager, on the restoration of both the island’s international airport and potable water supply, and plans to ensure such a crisis was never endured again.

Calling for “a clear, communicated plan for the recovery for Freeport businesses”, Mr LaRoda said what was required is “clear leadership that shares the strategy with Grand Bahama, works with and supports the businesses locally fighting to stay alive, and harnesses all the national and international interests that stand at the ready to help us recover.

“While we don’t doubt efforts are underway, we simply do not know what they are and no business can make informed decisions without such,” he continued, while further urging “concrete investment plans and strategies for business recovery the so that Grand Bahamian businesses can make their plans.

“So many Grand Bahamian businesses are trying to figure out how best to recover; they need to understand the plan for Grand Bahama in order to best do that.”

Mr LaRoda concluded: “The Grand Bahama Chamber of Commerce stands at the ready to work with the Port, the Government and all businesses to see a full recovery and revival of our economy. We have tried to get traction with dialogue and written communication to effectively move forward what is our collective goal of the full revitalisation of Grand Bahama.

“However, we cannot do this effectively without communication, dialogue and a clear strategy for our island. We certainly understand the unexpected crisis – no entity could have all the answers or plans in place to effectively manage the devastation wrought by Dorian. We appreciate that time is needed to develop that while managing a crisis.

“However, three months later after Dorian – along with several storms that have given us enough time to prepare for such a widespread disaster - critical communication, engagement and strategies must be shared if we want genuine recovery for all.”