In reviewing the Free National Movement’s (FNM) 2021 manifesto issued on Tuesday, August 31, 2021, special note was taken of its plans for Grand Bahama, wherein the FNM promised inter alia to “work with Grand Bahama Port Authority (GBPA) to improve Grand Bahama’s business processes, especially for micro-enterprise. Run a housing Program. Create a master plan for east and west Grand Bahama”.
For proper context, and to assess the FNM’s representational faithfulness, this promise needs to be compared to its plan for Grand Bahama outlined in its 2017 manifesto, which promised “to jumpstart and fix the Grand Bahama economy so that we may maximize and realize new, substantial sustainable development benefits …”
The FNM also promised to “repeal and replace The Grand Bahama (Port Area) Investment Incentive Act 2016 (the GBII Act) to ensure that all licensees receive equal treatment under the law”.
Partly true to their promise, on October 18, 2017, the newly elected FNM government repealed the GBII Act.
However, licensees of the Grand Bahama Port Authority (GBPA) are still waiting for the repealed legislation to be formally replaced, in order that the expired tax incentives, namely business license fees and real property taxes (hereinafter collectively referred to as the expired tax incentives) are allowed to legally continue.
Whilst these expired tax incentives continue to be enjoyed by GBPA licensees compliments of the central government’s “good graces”, in truth they have no legal standing.
These expired tax incentives undisputedly were and continue to be foundational to Freeport’s future economic success.
Hence any promised economic growth for Grand Bahama has been and will continue to be retarded until these expired tax incentives previously enjoyed by licensees of the GBPA are legally restored. Here is why.
The GBII Act sought inter alia, to re-ignite Grand Bahama’s economy and encourage foreign direct as well as domestic investment by tying further extension of the expired tax incentives to (i) specific undertakings provided by GBPA, Grand Bahama Development Company and Hutchison Whampoa and (ii) to the value of investments and the number of Bahamians actually employed or expected to be employed by then existing licensees, and prospective licensees of the GBPA.
These exemptions were automatically granted to the GBPA, Hutchison Whampoa and their respective wholly-owned subsidiaries and certain other qualified then existing GBPA licensees and prospective GBPA licensees for up to 20 years.
Other GBPA licensees’ tax incentives were automatically extended for a minimum of three years, with the possibility of having these exemptions extended for up to a maximum of 20 years, upon making application and meeting certain other eligibility requirements.
The key take-away here however, whether you were for or against the GBII Act, was that it effectively extended and preserved the tax exemptions relating to business license fees and real property taxes, for then existing and prospective GBPA licensees.
By repealing the GBII Act and not immediately replacing it, the FNM government literally threw the baby out with the bathwater; since neither the GBPA nor its licensees today has any legal assurance that they will continue to enjoy the expired tax incentives for the foreseeable future.
Stated another way, if re-elected, the FNM administration (i.e. the central government) would be able to assess business license fees and property taxes on GBPA’s licensees without serious legal challenge.
Hence GBPA licensees will find themselves in the onerous and untenable position of having to pay business license fees and service charges/property taxes to both the GBPA as well as the central government.
Moreover, with such uncertainty, it would be difficult if not impossible for the GBPA to ever again promote Freeport as a full-fledged Special Economic Zone.
Therefore, the FNM leader, who is the minister of finance, needs to explain to GBPA’s licensees and the residents of Grand Bahama at-large, exactly how, after committing such political malpractice, they intend to “work with the GBPA to improve the island’s business processes…”
Should not the central government’s focus over the last four and a half years as it relates to Freeport and Grand Bahama have been on legally preserving the expired tax incentives and bolstering Freeport’s brand as a Special Economic Zone?
After all, the Hawksbill Creek Agreement has another 33 years before it formally expires.
I ask you to put yourself in the place of a prospective investor. Would you be prepared to make a substantial investment in Freeport, if such uncertainty were hanging over your head like the sword of Damocles?
Perhaps this may be one of the reasons why no new serious investors have been knocking at the GBPA’s door for the last four and a half years.
Grand Bahama, it’s about your future!
— Kevin D. Seymour
Freeport, Grand Bahama