By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Family Island economies will ultimately retain a minimum 25 percent of real property taxes and Road Traffic fees generated on their specific islands through legislation that was yesterday described as a potential “game changer”.

Amendments to the Public Finance Management Act reveal that the Davis administration’s plan to create a Family Island Development Trust Fund, which will initially hold at least 10 percent of the revenues generated on these islands by these two revenue streams, are more extensive than the Prime Minister allowed for in his 2022-2023 Budget communication.

The reforms make clear that the revenues generated by each island will remain on that specific island “to defray expenses and fund expenditures of that Family Island”. This means that revenues generated on Abaco will remain on Abaco to finance much-needed infrastructure development and other community needs, with the same happening on Exuma, Eleuthera and all other Family Islands.

The Bill amending the legislation also makes clear that the 10 percent retention percentage is just the start, and only a minimum. While it will begin at that threshold in the 2022-2023 fiscal year, the percentage of real property taxes and Road Traffic fees retained by each Family Island will increase by law to a minimum 17 percent in 2023-2024, and then to 25 percent in 2024-2025 while remaining at that benchmark in all subsequent years.

Ken Hutton, Abaco’s Chamber of Commerce president, upon being informed of the increasing threshold told Tribune Business: “That’s very encouraging. If that’s true it could be a game changer for the island. That’s excellent news. I’m certainly not poo-pooing the idea. I want to see the devil in the details, and a lot of it will come down to management of the fund and who’s in charge of that.

“But it’s fantastic news and very forward-thinking. It’s time for that kind of thinking. As long as there is the intent for the Abaco community to have a significant, if not overwhelming say, in the use of those funds I think it’s a fabulous idea. I’m pleasantly surprised. It’s great news from the sound of it.”

Given its population size and number of second homeowners, even post-Dorian, Abaco should be the largest contributor of revenues to the Government’s proposed Family Island Development Trust given that Bahamian-owned properties are exempt from paying real property tax in the Out Islands.

The second largest contributors will be Exuma and Eleuthera, themselves with significant economies and second homeowner populations. However, revenue generated on more remote and less populated southern islands such as Rum Cay, Acklins, Crooked Island and Mayaguana will be less plentiful and those locations will still require major central government infrastructure spend.

The Davis administration’s strategy appears to be to ensure some tax revenues stay in the Family Island communities in which they are generated for their own betterment, rather than depositing all into the Consolidated Fund. It remains to be seen whether these Family Islands enjoy more local governance as opposed to being dictated to by Nassau, and have more say over local affairs and how the funds are spent.

Thomas Sands, the Eleuthera Chamber of Commerce’s president, told Tribune Business: “In principal this is a great idea and timely given the poor state of infrastructure. It will be important to understand more detail as to how this will work against an evaluation of real data or historic and projected numbers. How will projects be defined and prioritised, and where? Is this a general fund, and where and how will it be administered/”

Prime Minister Philip Davis, in unveiling the 2022-2023 Budget, said: “We have allocated 10 percent of overall revenue collected in the Family Islands from property tax and road traffic fees to the creation of a Family Island Development Trust Fund in the amount of $200m. This fund will facilitate the Government in making immediate and significant investment in Family Island infrastructure. This fund would be a sub-fund of the National Infrastructure Fund.

“We also propose to leverage the aviation-related revenue to create a fund for aviation infrastructure, which would be another sub-fund of the National Infrastructure Fund. This, combined with the Family Island Development Trust, will accelerate the reconstruction of Family Island airports. It will also end the practice of Family Island infrastructure improvements being made a lesser priority than infrastructure improvements in New Providence.

“It is important to note, however, Madam Speaker, that this does not mean that we will exclude Family Island projects from future capital budgets of the Ministry of Public Works. Far from it. It just means that the Family Islands will have their own dedicated fund to ensure that they keep pace with national development.”