By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday unveiled a tax compliance crackdown on the private island cruise line destinations that will be "the biggest driver" of Bahamian economic growth over the next five years.

Philip Davis KC, unveiling the 2025-2026 Budget in the House of Assembly, said the cruise industry's tax contribution to the Public Treasury "has not kept pace" with its explosive growth that saw passenger volumes increase by more than 20 percent to 9.4m in 2024.

As a result, he added that the Government has held tax compliance discussions with the cruise lines that are focusing on the payment of VAT on all imports to their Bahamian private island destinations; the levying of VAT on "all services offered for value" to guests; Customs duty enforcement; the payment of work permit fees for expatriate employees; and watercraft activities being reserved for Bahamians only.

Asserting that the move was designed to encourage "fairness and equity" in tourism, especially when it came to taxation, and provide oversight of the cruise sector, Mr Davis said: "Cruise tourism in The Bahamas has come a long way. What began as a modest stream of floating leisure has now become an economic powerhouse.

"In 2024 alone, cruise visitors numbered 9.4m — an increase of 20.3 percent over the previous year and representing a staggering 83.4 percent of total tourist arrivals. These numbers are not just impressive; they are transformative.

"But while cruise volumes have soared, the sector’s direct contribution to government revenue has not kept pace. We’ve seen exponential growth in private cruise destinations, where premium onshore activities like cabana rentals now fetch as much as $4,000 per day, yet these earnings often flow offshore with limited benefit to the Bahamian taxpayer," he continued.

"Today’s cruise ships are not just modes of transport. They are floating resorts, complete with their own entertainment, retail and shore excursion operations. When they dock at our shores, particularly at private islands, they often offer excursions from horseback riding and nature trails to zip lining, balloon rides, beach clubs and shopping villages. These experiences have contributed to the growth of GDP over past three years."

With Carnival poised to open its $600m Celebration Key destination this summer, and Royal Caribbean's $110m Paradise Island Beach Club targeting a December completion, the cruise industry's private Bahamian island network is set to expand further.

"This Budget reflects our intent to modernise and regulate this critical sector," the Prime Minister added. "In keeping with these principles, our Budget introduces targeted compliance measures to ensure cruise-related activities contribute fairly and meaningfully to our national development.

"Recently, the Government has been meeting with the cruise lines to streamline compliance in this sector. The cruise lines have acknowledged the importance of compliance and will continue to work with the Government to ensure that this happens in a sustainable manner....

"We expect that the economic activity on the private cruise destinations will be the biggest driver of GDP growth in the next three to five years, which underscores the importance of the information I’ve just shared."

Elsewhere, Mr Davis said the Government is "increasing support to farmers by 200 percent and expanding the overall agriculture budget from $25m to $35m" as part of its drive to boost food security, lower food costs and create job and entrepreneurial opportunities for Bahamians.

He added: "Over the past year this administration has transformed our agricultural and marine sectors through decisive action and strategic investment. We launched our National Layer and Piggery Programme, distributing over 10,000 chicks and 3,000 adult chickens. We also equipped farmers across Cat Island, Exuma, and Acklins with tractors and other essential equipment.

"Today, we are scaling these initiatives while making vital new investments. The Golden Yolk project has a large role to play in our plans for food security. We are investing $9m in the construction of pullet buildings capable of housing 25,000 chicks, dual layer houses for 20,000 hens, and an egg processing facility with capacity to process 8,000 eggs per hour.

"This past week, we signed an MoU (memorandum of understanding) to construct five hydroponic farms in New Providence, Grand Bahama, Abaco, Andros and Cat Island and embrace modern farming techniques that can provide healthy produce to even our most remote islands."

Mr Davis said the Government and Water & Sewerage Corporation intend to "buy out" Aqua Design's ownership of multiple Family Island reverse osmosis water plants to bring an end to their troubled relationship. Roadworks on Exuma, Eleuthera and Cat Island, with a total value of $250m, were said to be progressing to completion, and a contract has been signed for $22m in Long Island road upgrades.

The Government has also secured a $90m Inter-American Development Bank (IDB) loan to strengthen Bahamix, the state-owned road paving and building company. "This investment will enhance project management systems such as the launch of a comprehensive road and drainage improvement programme in New Providence," the Prime Minister added.

"It will be focused on resurfacing major thoroughfares, improving drainage in flood prone areas, and upgrading sidewalks, signage and lighting near schools, clinics and key public facilities." Mr Davis also pledged that The Bahamas will make it easier for regular private boat and aviation visitors to enter this nation.

"The Bahamas has long been a haven for private yachts and aircrafts. But our administrative systems have not kept pace with this reality. That changes now," the Prime Minister added. "We will introduce the Frequent Visitors Digital Card to make entry smoother, and compliance simpler, for private vessels and aircraft that visit our shores regularly.

"For private boats, each vessel will be required to have its own card, linked directly to its registration number. This card will be valid for two years and is intended exclusively for cruising, not for fishing or anchoring.

"For private aircraft, a separate FVDC will be introduced for propeller-driven planes, tied to the plane’s serial number. And just as with boats, the card is strictly for leisure travel, it does not cover commercial activities or charters."

Mr Davis said the Government will also create the Asset Disposal Assessment Unit to "examine physical government assets and recommend the optimal method for disposal". He explained: "They will recommend whether a public asset should be transferred to another public entity, sold, recycled, destroyed or any other method they will see fit.

"The Asset Disposal Assessment Unit will assist in the promotion of accountability, honesty and transparency for public assets which are no longer of its purposed use. Not only will the process be streamlined, but there will also be a record of government disposals. Public officers will be required to report if they have received overpayments for the disposal of non-financial government capital.

"For too long, certain systems have remained outdated with inefficiencies that frustrate Bahamians and drain public resources. In this Budget, we are taking meaningful steps to modernise how government works; how it taxes, how it charges, and how it serves."