By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The deputy prime minister says the government has “not reached the point” of finalising business licence reform despite being “very sensitive” to the burden it imposes on the private sector.

KP Turnquest, pictured, in a recent interview with Tribune Business, said the Minnis administration “fully understood” the challenges created by taxing a company’s top-line revenue but added that it had yet to determine an “acceptable alternative” that would both address this and satisfy the government’s revenue needs.

The Taylor Industries liquidator cited the business licence fee, and way in which it was assessed, as one factor that exacerbated the electrical contractor and retailer’s descent into insolvency. With the company consistently losing six-figure sums in the run-up to its January 2019 closure, it was still having to pay a business licence based on gross revenues of around $1.5m.

“This is an area we are very sensitive too,” Mr Turnquest said of the Business Licence, “and coming from the private sector myself I fully understand the challenge. We are still in the process of researching, and making sure what changes we make work for the long-term benefit of The Bahamas - from both the private sector and public sector viewpoint.

“We have not reached that point. We are in the process of finalising the Budget. These are things on the table, and as we work our way through we will see if there are any adjustments in this cycle.

“It’s certainly something I and the Government are very sensitive to. We are fully cognisant and understand the challenge taxing the top line number brings to some businesses, particularly from a cash flow perspective. We continue to do our research in this area to see if there’s an acceptable alternative that’s easy to administer and serves the Bahamian people.”

Besides the additional tax burden imposed on loss-making Bahamian businesses, the Business Licence has long been viewed as inherently unfair because it penalises high turnover, low margin businesses - such as food stores and gas stations - in comparison to high margin, low turnover counterparts such as law firms.

It remains, though, a valuable revenue earner for the Government in generating between $120m to $130m per year. Any profit-based tax, for instance, would likely yield much less for the Public Treasury despite being more acceptable to the private sector.

Mr Turnquest, meanwhile, said service quality will become an increasingly important factor in making Bahamian businesses stand out from their rivals in an increasingly competitive environment that is being impacted by online purchases and other disruptors.

“It is becoming more and more competitive to do business in The Bahamas, as it is globally, and with the migration and access to both online and traditional services, there is an increasingly diversified set of competitors,” he told Tribune Business.

“All of us have to raise our game and ensure we’re providing the kind of service the Bahamian people want. In this environment, where product is so available and access so competitive, the differentiator is going to be service in a lot of instances long-term.”

Mr Turnquest said the Government was aiming to support Bahamian businesses where it could by creating an improved business climate, and through initiatives such as the Small Business Development Centre (SBDC) and setting aside 20 percent of its procurement budget for local micro, small and medium-sized enterprises (MSMEs).

He admitted, though, that the Government “cannot do it by ourselves”, and added: “We appreciate the pressures of doing business in an island with limited population.... We have to help deepen and broaden the economy, and that brings with it increased competition and participation in some sectors.

“For some of the traditional retailers that’s going to change the way they do business, and their levels of profitability will be affected as a result of that. That’s where we find ourselves in our business cycle, and we have to find ways to differentiate ourselves to retain market share.”