By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Association of Bahamas Marinas (ABM) president yesterday branded the Opposition’s pledge to eliminate the payment of VAT on foreign yacht charter fees as “the smartest thing I’ve heard”.

Peter Maury, reacting to Michael Pintard’s House of Assembly promise over some of the reforms a government led by himself would enact, told Tribune Business that the hiked fees and taxes on the boating industry are still “just causing havoc” as he hailed the Opposition leader for actually listening to the concerns of Bahamian entrepreneurs and businesses.

Mr Pintard, in an interview with this newspaper, justified the proposal to eliminate the yacht charter fee VAT implemented by the Davis administration on the basis that The Bahamas would “make more money on the back end” by removing a financial burden blamed for driving high-end boating and yachting traffic away from this nation’s shores.

Rather than levy taxes prior to a vessel actually starting its charter, he argued that removing the VAT would help attract more boats to The Bahamas and, in so doing, boost taxable spending by passengers and crews with local businesses such as food stores, gas stations, restaurants, transportation providers and other industries. This would then offset the VAT foregone upfront while boosting business for Bahamian companies.

And, noting that the fall-out from reduced boating traffic extends beyond just Bahamian marinas, Mr Pintard said he and other Free National Movement (FNM) members had been informed by aviation operators, car rental companies, janitorial/cleaning firms and others that their trade has “fallen off a cliff” as foreign yachts and charters choose rival destinations to escape higher taxes and overly-bureaucratic permit processes.

Unveiling what are likely to be elements of the Free National Movement’s (FNM) general election economic manifesto, Mr Pintard pledged in the House of Assembly on Wednesday: “We will reverse the 10 percent fee imposed on yacht charters, which has driven away nearly 49 percent of that business south of us.

“Turks and Caicos must have sent the Bahamian government a thank you card, and St Maarten is surely thanking us for increasing their revenue generation from an industry that poor policies have nearly destroyed here in The Bahamas.”

Responding to the pledge, Mr Maury told Tribune Business: “That is the smartest thing I’ve heard. It’s [the VAT on yacht charter fees] just causing havoc. I have a VAT certificate that I applied for on January 9 for a yacht, and today I still don’t have it. I sent them an e-mail. It’s a matter of urgency now. I sent it again today [yesterday].

“They [the boat] have sent the money to pay the VAT. I need to pay it. It’s now almost three months. I challenge anybody to say otherwise because all the boats, all the captains, are saying the same thing. It just takes too long to get anything done. It’s not just Bahamian businesses complaining about the backlog of Business Licences and everything else. It just causes havoc. Anything would help right now.

“It’s just hurting Bahamians right now. Their big push to get all this money did nothing except send business out of this country and hurt the Bahamian people. I’ve got friends who got into this industry who have had to close their businesses. I know of two or three that have left The Bahamas, Bahamians that had businesses here, and have gone elsewhere. They money doesn’t come here, doesn’t get spent here.”

Mr Pintard told Tribune Business that eliminating the VAT on foreign yacht charters would not result in the Public Treasury losing revenue but, instead, the tax take could ultimately increase by driving increased in-destination spending by visiting crews and their guests.

“A part of removing the tax is we make the money on the back end,” the Opposition leader argued. “They’re shopping in the food stores, they’re renting cars, they’re hiring planes to take people working on the vessels to the Family Islands. They order parts from the US.

“Aviation persons we have consulted with say it’s [the VAT imposition] negatively impacted their business. A car rental business is saying they’re going to give back some of their plates. They increased their business because they had a strong demand. Now that demand has fallen off a cliff.”

Mr Pintard added that janitorial and cleaning companies, who expanded staffing levels and became certified in cleaning different types of boat surfaces, including hulls, due to the previous increase in demand, as well as Bahamians actually hired as vessel crews, have also been hit as a result of “boats no longer coming here and going south”.

“There’s a lot of spin-off enterprises, and I sat with several of them who mentioned massive reductions in their business,” Mr Pintard added. “It’s affected attorneys. A number of them [boats] have retained attorneys, local professionals to provide services to them. It’s impacted those professionals in the legal fraternity because of the fall-off in boats from the taxes.”

The Davis administration, though, has sought to justify the boating-related fee increases by accusing many foreign yacht charters of evading and avoiding the 4 percent Port Department fee that had been in place for years. As a result, these vessels - and their owners and operators - were enjoying a ‘free ride’ by using The Bahamas maritime environment, in particular, for their business will contributing nothing to its upkeep.

Michael Halkitis, minister of economic affairs, argued in the wake of VAT’s introduction in the 2022-2023 Budget that the foreign yacht charter industry had for years “enjoyed a windfall at The Bahamas’ expense” by using this country’s marine environment and natural resources to earn millions of dollars without paying its fair share to the Public Treasury.

And Dexter Fernander, the Department of Inland Revenue’s operations chief, told Tribune Business recently he is “baffled” at assertions that yacht and boat charters are facing significant delays in obtaining TINs because there is a “fast track process” for their issuance given that this represents “easy money” for the Government.

However, Mr Pintard argued that vessel owners, charter companies and others in the industry are comparing the taxes and fees they pay in The Bahamas to rival destinations. Suggesting that the Government had not done its research, he added: “When they compare what we have lost to taxes gained they can see there is a big differential and spread.

“They should not have made that decision without making the analysis... We have not tackled it by properly crunching the numbers. I think we have made a mistake and we need to rethink it.” The Opposition said it was a fallacy to believe boats will not bypass The Bahamas because of the higher fuel costs associated with going to the southern Caribbean, as increased charter business can more than compensate.

Besides eliminating the yacht charter fee VAT, Mr Pintard also pledged to improve the ease of doing business for visiting boaters when it came to clearing/entering into The Bahamas and when persons or supplies have to be brought or temporarily leave the jurisdiction.

Alongside making it easier to obtain cruising and foreign yacht charter permits via a “really simple, seamless process”, he promised that an FNM administration would also remove “impediments” to boats bringing in essential mechanical parts and personnel from overseas so that repairs can be effected in The Bahamas. Immigration challenges with persons having to temporarily exit The Bahamas will also be addressed.

“They’re out of touch with the average person in business,” Mr Maury said yesterday of policymakers. “I’m glad to hear Pintard said that because maybe someone finally listened to the average Bahamian who wants to own a company, who wants to be in business, and not live off the Government. All businesses, every industry, are just complaining about the lack of getting things done - the Business Licence, VAT compliance.”