• No good if ‘only a number’, says top accountant

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government must ensure that every new foreign and domestic investment project is “felt by the man on the street” otherwise “it’s only a number”, a well-known accountant has warned.

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez managing partner, told Tribune Business that the $897m in foreign direct investment (FDI) for 2020 - much-hyped by the former Minnis administration - was relatively meaningless if it was not felt by working class Bahamians via increased jobs, incomes and economic activity.

The United Nations (UN) agency that came up with the $897m figure said much of it related to Hurricane Dorian reinsurance claims, which was not disclosed by the last government. And Mr Gomez said: “When next time we quote these numbers, we have to be sure; the Government has to be sure, that this impact can be felt at ground level.

“The ‘man on the street’, the working class, has to be able to feel the impact of foreign direct investment otherwise it’s only a number, and something only the business community and economists will talk about. We want to get this economy to the point where any investment, foreign or domestic, is felt by the working class in this community.”

While The Bahamas led all small island developing states (SIDS) in the amount of foreign direct investment attracted in 2020, attracting more than double the dollar amount of any other nation in the same category, the small print in the report detailing the 47 percent rise to $897m showed this was not as impressive as it seemed.

For it indicated that much of the increase stemmed from reinsurance inflows related to Hurricane Dorian reconstruction, as opposed to capital investments in tourism and other industries/businesses, thus highlighting Mr Gomez’s concerns about such projects positively touching and benefiting all levels of Bahamian society.

The Baker Tilly chief, meanwhile, said Prime Minister Philip Davis and his administration will also have to “drill in” to the country’s unemployment numbers given the pressing priority to get more Bahamians back to full-time work so they can take care of themselves and their families.

No official unemployment estimates have been produced since the COVID-19 pandemic began, with the last data released in November 2019 just after Hurricane Dorian. Besides those looking for work and unable to find it, Mr Gomez said the Government will also have to factor under-employment and reduced incomes into its calculations as well as those workers still on furlough.

Backing its focus on improving the ease of doing business, and furthering reforms started by the past administration, Mr Gomez added that the Davis-led government will also have to address the perception (and reality) among most Bahamian businessmen and women that foreign investors receive preferential treatment and more tax breaks/concessions than they do in their own country.

“The Government has an opportunity now, as it assesses the way forward, to see the process of attracting foreign direct investment and, at the same time, not ignore Bahamians wanting to do a similar business,” Mr Gomez said.

“It’s always been the view of Bahamian businessmen that the concessions provided for foreign business persons doing business in The Bahamas exceed what they receive. The carpet has thus been made a lot lighter for those persons.

“The carpet has been laid out and greater concessions provided for foreign businessmen seeking to do business in The Bahamas versus Bahamians seeking to do similar businesses but not provided the same concessions,” Mr Gomez added. 

“The Government has a two-prong exercise to perform. It must attract foreign direct investment and stimulate domestic business. A Bahamian employing five, ten persons, it all adds up and helps to grow our economy.”

Rather than implement any new and/or increased taxes to tackle The Bahamas’ expanding $10.356bn national debt, Mr Gomez backed the Progressive Liberal Party’s (PLP) election “blueprint” by arguing that the new administration should focus on collecting existing taxes on the books - especially the $600m in outstanding real property tax said to be owed by the Auditor General.

With tax increases the last thing already-struggling businesses and consumers can shoulder, the Baker Tilly chief told Tribune Business: “The Bahamas has not so much a unique position, but government taxes have not been collected.

“I don’t know if this government will look to increase taxes, especially given that they ran on a platform that the increase in VAT [by the Minnis administration] was not necessary, and they promised a rate cut to 10 percent.

“We have an idea of how much uncollected tax there is. I think we’ve reached this place where the new government can exercise its right to create mechanisms to allow persons who owe the Government funds to pay taxes without penalty.”

Tax amnesties have always been controversial in that they reward delinquent taxpayers but do not do similar for those who have always paid in full and on time. The recent real property tax amnesty generated at least $27m for the Public Treasury, although the corresponding amount that was written-off has yet to be disclosed.

However, Mr Gomez said that once delinquent taxpayers had failed to pay despite being given ample time to do so, “it will then call for the aggressive collection of taxes without having to go to new taxes”. He acknowledged, though, that such collection efforts will be difficult in a COVID-wracked economy where many persons are struggling to make ends meet.

“Collection of any kind of tax is very difficult when you see mortgages defaulting and higher unemployment because no matter what tax relief you bring to the table, if you cannot pay, you cannot pay,” the Baker Tilly chief said.

“Getting the economy back on line so people who own homes and real estate can get into a payment plan for arrears is absolutely essential for the collection of taxes.”