It is sad when intelligent PLPs like Alfred Sears and Khaalis Rolle find themselves seemingly singing from the FNM’s dreadful hymn book on fiscal and investment policy – a chorus that has brought this country untold harm.
While any sensible observer must agree with Rolle that the COVID-19 crisis underlines the need for the foreign exchange, employment and revenues that come from foreign direct investment (FDI), to suggest either a loosening of rules governing FDI or an expansion of concessions in pursuit of it utterly misses the point.
What the last few decades have shown us is that, despite levels of FDI that are unheard of in any similar sized country ($947 million, or $2,700 per Bahamian last year), vast and irresponsible tax concessions and a desperate attitude toward approvals have ensured the benefits do not match the numbers.
As we gullibly follow the lead of big names and prestigious brands, our hotels morph into non-tax-bearing rental condominium communities and cruise companies get huge concessions for turning private islands into hermetically sealed bubbles of repatriated profit.
Following the Oban fiasco, the giveaway to Disney at Lighthouse Point and the recent Royal Caribbean deal involving both the hotels at Our Lucaya and the western end of Paradise Island, it should by now be obvious that our failure has not been in attracting investment to The Bahamas, but rather in maximizing its benefits by sound judgment, sensible negotiation and responsible tax policies.
I must give Rolle the benefit of the doubt and assume that his appeal for speedier investment approvals refers to the need for less of the red tape and administrative paralysis that stymies all kinds of things in The Bahamas, rather than calling for the acceleration of an investment policy that has become destructively loose and concessionary to the point that it actually undermines prospects for sustainable growth.
Of even more concern was Sears’ recent suggestion that The Bahamas appeal to multinational bodies for the cancelation of its sovereign debt, on the false basis that our fiscal problems (which are certain to worsen following the COVID-19 crisis) result from our being made up of small islands, rather than from our deliberate decision to exempt our wealthier residents from worldwide norms of progressive taxation and to pass the cost of this decision onto the poor.
The result is a regressive tax system that collects a miniscule portion of our national wealth in revenues (18 percent as against a world average of around 40 percent).
Leaving aside the absurdity of a country that has the luxury of funding its budget without taxes on capital gains, corporate or personal income pretending to be among the wretched of the earth; leaving aside the fact that the countries we will be begging for “relief” cannot themselves afford to exempt their rich from taxes on wealth and income (as we choose to do) without going bust, and would therefore naturally regard our request as comical, if not offensive.
Leaving all that aside, any “relief” extended to us by multinational bodies in deference to our longstanding tradition of exempting our wealthiest residents from having to pay their fair share of taxes, will come with demands — “bitter medicines” that will fall disproportionately upon the poor and the middle class, the two groups who have not benefited from that bizarre and inexplicable tradition.
These “bitter medicines” (cuts to social spending, irresponsible slashing of civil service jobs and increases in consumption taxes, like VAT) have already all been visited on us every time an external crisis has combined with our regressive tax system to expose the obvious: a narrow and inflexible revenue base, incapable of absorbing shocks.
Predictably, members of regressive interest groups have already used the COVID-19 crisis to call for exactly these medicines and FNM politicians have hinted their agreement — all carefully side-stepping the obvious question of why the wealthy are not finally being made to pay their fair share of our tax burden, as they do everywhere else.
Such side-stepping is to be expected of FNM politicians and the special interests that fund their party. But it is astonishing that, even among our more intelligent and progressive thinkers, there are calls to falsely present The Bahamas as a case for the world’s pity rather than to address the unsustainable and inequitable distribution of wealth and taxes that we maintain as a matter of choice.
— Andrew Allen