By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Businesses yesterday urged the Government not to “tax their way to success” in tomorrow’s 2024-2025 Budget, arguing: “There’s only so much you can wring out of a stone.”

Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business he is hoping the Davis administration “leaves everything alone for now” and is not tempted to impose new and/or increased taxes on the private sector and consumers.

While the Government has not signalled that it has such a plan, he pointed to the multiple boat registration and other fee increases introduced with last year’s Budget that were “not necessarily called a tax” plus the ever-increasing “red tape” that the private sector has to grapple with.

Mr Albury, arguing that the Government should continue its pursuit of tax arrears as its “low-hanging fruit”, told this newspaper that “through the roof” inflation and the ongoing cost of living crisis, plus the continued erosion and weakness of the Bahamian middle class, were further reasons why the 2024-2025 Budget should not seek to increase the tax burden.

Pointing to Friday’s comments by Michael Halkitis, minister of economic affairs, that Bahamian economic growth is starting to “taper off” following the post-COVID reflation and revert to historical levels of 1-2 percent, the BMDA chief said of the Government: “I hope they’ve listened to that and are finished with taxation and things of that nature that may prohibit keeping any sort of stable growth.

“There’s a lot of fees and red tape, and a lot of things that have changed without necessarily calling it a tax. I hope they are mindful of where we are now, and they should be proud of the way we’ve rebounded and need to do whatever they can to protect that.

“I’m hoping they leave everything alone for now. I think revenue should be up. They’ve done a lot to go after tax delinquents and gaps, and have capitalised on a strong economy with strong tourism numbers and strong construction numbers,” Mr Albury continued.

“Hopefully they don’t try and tax their way to success. There’s only so much you can wring out of a stone. I guess we’ll know more as they debate the Budget in the House and we’ll hope for the very best. They’ve worked hard to close a lot of the loopholes and go after a lot of delinquents. That’s the channel that should be the focus: People not paying real property taxes, NIB contributions, Business Licence fees.”

Warning that many in the private sector and consumers will be hard-pressed to cope with any new or increased taxation, Mr Albury added: “There’s a lot of low-hanging fruit to be tackled before we get into the business of raising taxes.

“Right now inflation is still killing people across the board.. shipping charges, fuel costs, everything is through the roof. I imagine a lot of families even with an improved economy are finding it hard to each week take care of their families and do what they need to do. There’s a big disparity here. The middle class is not that strong any more.”

Philip Galanis, the HLB Bahamas accounting firm’s principal, yesterday told Tribune Business that the cost of living crisis is likely the “most intransigent” pressing problem that the Government faces but there is relatively little the Government can do about it given that - as a nation which imports all it consumes - this country brings in most of its pricing pressures from the outside.

“I’m hoping that we’re going to hear something about tax relief for people who are really hurting,” he said. “We’ve had a period of time when taxes and fees have gone up; Business Licences. There’s a lot of conversation in the public space about taxes and taxation...

“I don’t know what’s going to happen in terms of the national debt. I’m always concerned when the debt is rising. I think that what we’re going to likely hear is that the economy is on the rebound. From where I sit with my clients and what I see generally, people are reporting better than average earnings, which is a positive thing.

“I don’t think there is any immediate action out there that will drive up the cost of living. The cost of living is the most intransigent thing that the Government has to deal with. A lot of that is oil-based, petroleum-based, so I don’t think there’s a lot the Government can do about that.”

Mr Galanis, who is also chair of the Bahamas Trade Commission, also expressed hope that some Customs duties and tariff rates will be reduced as part of an effort to enhance this nation’s trading regime and move to a more liberalised environment, and suggested that Bahamas Power & Light (BPL) and wider energy sector reform will also be on the agenda.

“We’re moving very close to a general election, so the Government is going to have to do some things that create some excitement and create some movement where people feel it in their pocket books. So I think we’ll hear from that.”

Mr Galanis also backed the Government’s plans to introduce legislation accompanying the Budget that will give effect to the Qualified Domestic Minimum Top-Up Tax, which will levy a 15 percent corporate income tax on the profits of Bahamas-based companies which are part of multinational groups with an annual turnover exceeding 750m euros.

This will enable The Bahamas to fulfill the commitments it made when signing on to the G-20/OECD global minimum corporate tax initiative. Mr Halkitis last week said the Government believed only around 50 Bahamas-domiciled entities will be caught by the new tax, which is projected to generate around $140m in annual revenue when implemented for a whole year.

“Our intent is to present the legislation with the Budget and allow the summer period between Budget time and when we go back to Parliament in mid to late September for consultation, and then we intend to bring that into effect,” Mr Halkitis said.

“We have been having a lot of consultation with the companies that fall into that range, and we don’t expect to see any negative fall-out in terms of push back or exodus of business.” He added that “the wider business community” and “your sort of regular companies” will not be impacted by the legislation.