By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Association of The Bahamas Marinas (ABM) president yesterday argued the Government could have allayed fears over major hikes in yacht and boat registration fees if its Budget messaging was better.

Peter Maury, who operates Bay Street Marina, told Tribune Business that the Government's strategy "absolutely makes way more sense" now that the Prime Minister has affirmed taxes amounting to a combined 20 percent of a vessel's value are being eliminated in the 2023-2024 Budget.

Philip Davis KC, leading off debate in the House of Assembly yesterday, said: "The marine sector is another area where there has been chronic under performance in revenue. Some of this under performance could be attributed to bad policy, which we are now correcting.

"Currently the combined duty and VAT rate is too onerous in comparison to registering the vessel in the US, Jamaica or Cayman Islands, so many Bahamian pleasure boat owners are avoiding registering the vessel in The Bahamas and instead just paying the $1,000 cruising permit. In this Budget, we are eliminating both the duty and VAT and putting in place an updated fee schedule for the registration of pleasure crafts. This shift will encourage domestic registration of these vessels."

Given that the duty rate and VAT are both 10 percent, Mr Maury said this would eliminate a 20 percent combined tax rate imposed on boat and yacht owners who bring their vessels to The Bahamas to register. This could amount to a $200,000 tax liability on a $1m boat/yacht, he added, and its elimination will make The Bahamas more cost competitive and attractive to vessel owners thus helping to fuel the country's ambition to develop a yacht registry.

And the tax adjustments will also offset the eight-fold and ten-fold increases in registration fees contained in the Boat Registration (Yacht) (Amendment) Rules 2023 which were tabled in the House of Assembly with the 2023-2024 Budget. "You can bring the boat in and register it in-country instead of paying duty and VAT," the former ABM president told this newspaper following the Prime Minister's clarification.

"In speaking to someone at the Ministry of Finance, they said the idea is to get rid of the VAT and duty, and you just pay a higher registration fee to come in. The registration fees have gone up, but you're not paying duty and VAT, which makes way more sense as people are more inclined to bring their boat in and register in The Bahamas and develop a yacht registry."

Mr Maury had initially reacted negatively to the multiple fee and levy increases being imposed on boat and yacht owners, and yesterday called for better communication between the Government and marina industry so such changes can be better explained to brokers, yacht owners and captains.

"Honest to God, if you think about this, we have to explain this to people in the industry," he added. "Brokers, yacht captains and potential owners look at all this and ask: 'What is this?' What jumps off the page is these higher registration fees. If we had the opportunity to speak about what the intent is here, we can disseminate the message better.

"If someone can register a boat in The Bahamas; a foreigner, Bahamian or resident, and pay registration fees but no VAT and no duty, I don't think it's too bad. That's the message we should have sent out before we put this [registration fee hikes] out. What he's [the Prime Minister] said is a lot clearer, and that's what the people in the Ministry of Finance said to me.

"In this world, a 40-foot centre console with four engines on them, are well over $1m. All these boats have to go on lifts, go to fuel docks and are used throughout the country. In that category, you will pay a $7,000 registration fee but find way more boats with The Bahamas' flag on."

Prior to Mr Davis' confirmation of the VAT and duty elimination, Mr Maury had earlier this week complained about seven and ten-fold increases in first-time registration fees for particular classes of yachts. First-time registrants of vessels between 40 to 49 feet in length, and 50 to 59 feet, are set for fee increases from the previous $1,000 to $7,000 and $10,000 respectively.

And a 200-foot yacht will have to pay $35,000 compared to the current $4,000, which represents an eight-fold hike. While happier that this will be offset by the VAT and duty elimination, Mr Maury still voiced misgivings over the 20 percent dock fee increase imposed on marinas' commercial clients.

"The 20 percent increase, a lot of us have already made contracts into next year," he told this newspaper. "Typically charters book a year in advance. They want to know what they're going to spend, and where they're going to go, whether it's The Bahamas or Caribbean. When they hit us with this 20 percent increase, we've got to absorb it. Dock contracts are set."

The Ports Authorities (Amendment) Bill 2023 stipulates in its "objects and reasons" section that the purpose is "to increase the fee payable for the use of various marine structures" such as docks, jetties, groins, moorings, causeways and pipelines. And the "pierage rate", based on a vessel's registered length, is to increase by one cent per foot to eight cents.

"It's a 20 percent increase on the docks," Mr Maury told Tribune Business earlier this week of the per foot fee to be paid by marinas' commercial vessel customers with effect from July 1. "It's basically a 20 percent increase on the fees we pay for commercial vessels to dock. It looks like everything's getting an increase - the private, industrial.

"Nassau and the Family Islands will see it. For the marinas it's an operating cost that we can pass on the customer, but at some point the customer's going to break and say: 'We're not going to absorb or pay this'. And it might not necessarily be something that we can pass on. It might be a direct loss to revenue for us. A lot of us have set terms, monthly and weekly rentals, and we can't just increase somebody's dockage by 20 percent. It would be a direct loss to the business.."