By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government wrote-off $62m in outstanding real property taxes to gain just $37.5m in extra revenue via its recent amnesty initiative, it was revealed last night.

Unveiling its fiscal performance for the three months to end-September 2021, the Government disclosed that it has “foregone” 65 percent more in taxes than it actually collected through this programme. Or, flipped the other way, it gained a sum that is 39.4 percent less than what it has written-off.

“On March 1, 2021, the Government announced the Real Property Tax Forgiveness Programme, which provided waivers to Bahamian and non-Bahamian property owners in The Bahamas who are in arrears,” the 2021-2022 first quarter fiscal report said.

“The programme seeks to boost the collection of outstanding property taxes, by incentivising property owners, many of whom have been adversely impacted by the COVID-19 pandemic, to become compliant. The programme ended on September 30, 2021, and yielded $37.5m in total. As a result of this initiative, $61.9m in tax revenue was foregone by the Government.”

The report added that some $9.8m, or just over 25 percent of the total $37.5m, was brought in during the three months to end-September 2021. “Taxes on property improved by an estimated $12.1m to $20.6m, and represented 13 percent of the annual budget for such collections,” it said.

“Property tax collections during the quarter benefited from an additional $9.8m as the result of Government’s real property tax amnesty programme.” Thus the amnesty initiative accounted for almost half the real property tax realised during that period, or more than 80 percent of the actual improvement.

However, the revelations are likely to raise fresh questions about the value of so-called real property tax amnesties given that the sum foregone by the Public Treasury is significantly in excess of what has been gained. However, the converse argument is that the $37.5m yielded would never have been realised without the incentives, and thus it still represents a timely gain.

The initiative, which was accessible to only Bahamian property owners, saw the Government waive up to 50 percent of a taxpayer’s total arrears, including overdue taxes and accumulated surcharges, if the full remaining 50 percent balance was paid by end-September 2021. Arrears had to be outstanding for more than 180 days.

Alternatively, those who made a 25 percent “downpayment” on their arrears and entered into a payment plan for the balance will see all penalty surcharges waived if they do so by the September deadline. Again, the arrears had to be outstanding for 180 days or more.

Given these parameters, the maximum amount that could have been written-off would appear to be $37.5m - the sum equal to what was collected given the 50/50 split between forgiveness and payment in the first option. This, too, raises questions as to whether agreements were reached to forego greater sums beyond the set limits.

The $37.5m-plus collected via the amnesty initiative is a relatively minuscule sum when set against the $600.48m in outstanding real property tax arrears the Auditor General said were outstanding at the end of the 2017-2018 fiscal year. It is equivalent to just 6.2 percent of that amount, and the $600.48m will likely have increased significantly since then.

Still, the depth of The Bahamas’ fiscal crisis means that the Public Treasury needs every cent it can lay its hands on, so the extra revenues generated are nothing to be dismissed or sneered at.

Elsewhere, the Government’s total revenues rose by 90.3 percent or $271.9m year-over-year for the 2021-2022 first quarter, reaching $572.8m as they were aided by the economy’s post-COVID re-opening and a weak prior year period that was impacted by lockdowns, curfews and other restrictions.

With the quarter’s revenue performance accounting for 25.5 percent of the Budget forecast, the Government’s fiscal “snapshot” report said: “The improved revenue performance is largely the result of a relaxation of COVID-19 health and safety measures in place in the year prior, including border closures and the imposition of lockdowns.

“The above-budget gains were supported by tax revenue increases of $230.2m (85.4 percent) to $499.7m (25.9 percent of budget) compared to the same period in the previous year. Similarly, non- tax revenue improved by $41.6m (132.5 percent) to $73m (55.2 percent of the budget).”

Breaking down the revenue upturn, the report added: “VAT receipts were elevated by $160m (118.8 percent) to $294.7m or 34.9 percent of the budget. Taxes on goods and services, which encompasses 72.6 percent of tax revenues, were elevated by $182.4m (101 percent), representing 26.7 percent of budget.

“Taxes on international trade and transactions increased by $34.8m (44 percent) to position at $113.9m – 28.1 percent of budget. In the year prior, international activities were hampered after the attempt to re-open the tourism sector of the economy failed due to a second COVID-19 wave necessitating border closures and the reimposition of lockdowns.”

Illustrating the severity of 2020’s tourism shutdown, the Government “snapshot” added that departure tax collections had increased close to seven-fold, rising by $9m year-over-year in the 2021-2022 first quarter to hit $10.6m. Customs duties and other import duties rose by $19.4m to $61.7m.

“Taxes on specific services (gaming taxes) increased by $5.1m (93.7 percent) totalling $10.5m, largely due to improvements in labour market conditions as compared to the year prior,” the report said.