By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is seeking private sector recommendations on potential Customs tariff cuts that could be implemented via the upcoming 2022-2023 Budget as a means to ease the impact of soaring inflation on Bahamians.

Well-placed Tribune Business sources, speaking on condition of anonymity, said Senator Michael Halkitis, minister of economic affairs, had asked businesses to submit a list of tariff headings that could potentially be slashed along with new rates when he met with Bahamas Chamber of Commerce and Employers Confederation (BCCEC) executives - including members of its ease of doing business committee - on Friday.

Ben Albury, president of the Bahamas Motor Dealers Association (BMDA), whose members and consumers face some of The Bahamas’ highest Excise tax rates, confirmed to this newspaper that the sector was currently formulating its reduction proposals.

With prices continuing to “blow up”, he added that it was vital that The Bahamas “try to get a grip” on soaring inflation given the threat it poses to living standards, quality of life and the post-COVID economic recovery. “I have spoken to somebody at the Chamber who advised they’re [the Government] looking at ways to try and ease the burden on Bahamians with the severe rate of inflation being seen worldwide,” Mr Albury confirmed.

“I am very happy to hear they are. It seems the Government are very interested in consulting to find out where these impacts are felt the most, and how we can level things off to some degree. I think that all consumers have noted that, everywhere they go, prices are blowing up. This inflation is something we have not seen for a very long time. It’s extremely important to try and get a grip on it.”

The US Federal Reserve last week raised interest rates in a bid to curb surging inflation that has hit peaks not seen for 40 years, with the year-over-year increase hitting 7 percent in December and January. Similar inflation is being experienced in the UK and European Union (EU) with Russia’s invasion of Ukraine only worsening the situation. 

Mr Halkitis, in his mid-year Budget address to the Senate, yesterday conceded there was “little that can be done in the short-term” by The Bahamas to combat surging inflation given that the nation is a price taker that imports virtually all it consumes. However, the tariff cut recommendations indicate that the Government is at least exploring all options, even though any reductions will have to be carefully targeted so they do not undermine its dire fiscal position.

And the International Monetary Fund (IMF), in its Article IV statement on The Bahamas, said: “It will be important to allow higher international food and energy costs to pass through to domestic prices alongside targeted support to protect the poorest members of society..... Higher food and oil prices, including because of the effects of the war in Ukraine, could erode consumer demand and impose a particularly heavy burden on the vulnerable.”

Mr Albury, meanwhile, said of the Government’s call for tariff reduction suggestions: “They seem to be very receptive and interested in talking and trying to find ways to lessen the burden on Bahamians. That approach is very welcome. It’s something we’ve been looking for for quite a while.

“The BMDA has started dialogue among its members to make recommendations to ease the burden on businesses, consumers and, hopefully, the Government can collect the revenue necessary to keep the country functioning. We know the Government is facing financial challenges of their own. They’re having their own issues to deal with. There has to be respect from all parties involved, and the Government functions in the way it needs to and provides much-needed relief to people who have been hurting for a while.”

The auto industry is likely one of the most heavily regulated and taxed sectors in The Bahamas. While electric and hybrid vehicles face a 10 percent Excise Tax; and gasoline autos with an engine size of up to 1.5 litres, a 25 percent tax rate; those with engines of between 1.5 to 2 litres and over 2 litres are taxed at 45 percent and 65 percent, respectively. Commercial vehicles, too, face a 65 percent tax rate.

Asked about the impact of any tariff cuts, Mr Albury told Tribune Business: “I think it would be fantastic for us from a cash flow perspective and to pass price savings on to consumers. You have businesses that need to refresh their fleets, and and having a challenge to do so considering the costs nowadays.

“We have already started formulating a list and putting down the recommendations we believe will be necessary. I’ve already done a draft, and am hoping to have that finalised between today and tomorrow. That’s all we can ask for. At least the discussion is being had. That’s a key first step, and hopefully it will materialise into something that works for everybody. They’re at least listening to people’s cries. Let’s see what happens.

Mr Albury said vehicle prices from his suppliers were changing frequently, while the price of an airline ticket had altered between the time he went online and when he actually booked and paid for it. “I see shipping companies are sending out notifications to expect further increases in shipping costs in the next two months,” he added.