The Nassau Guardian April 15, 2020
Deputy Leader of the Progressive Liberal Party (PLP) Chester Cooper has developed and made public a plan for sweeping changes to fiscal and governmental policy, to reduce the downside effects on The Bahamas’ economy as a result of the novel coronavirus (COVID-19). The plan includes tax incentives for the tourism industry, changes to the country’s tax regime and the launch in earnest of a sustainable food program.
Copper said the “Mitigation of Coronavirus Economic Fallout” plan was contributed to by “the best financial and economic minds and turn-around specialists in the country; as well as members of our parliamentary caucus”.
The plan assembles more than 30 touch points suggested by its contributors. Some of those points were suggested in the House of Assembly by Cooper two weeks ago, including the allocation of funds to myriad programs designed to keep the economy afloat, like temporary employment programs; public-private partnerships for projects; and the development of a state-of-the-art digital infrastructure.
This latest plan includes changes to the country’s tax regime in order to ease the economic pressure on citizens and shore up revenue collection in other areas.
“Tax reform should be undertaken, specifically looking at restructuring taxes to ensure that they are progressive and equitable,” the plan states.
“We should conduct studies to validate the possible reduction of the VAT (value-added tax) rate, eliminating all ill-conceived zero ratings. This will result in an increase in revenues by making the regime more efficient, improving revenues, reducing avoidance and evasion and creating greater transparency.
“We must also reform the business license regime and conduct extensive empirical studies on corporate income tax for both domestic and international companies.”
The plan also calls for numerous tax breaks and tax credits to incentivize the restart and jumpstart of certain industries after the COVID-19 threat has passed.
The plan suggests business license holidays and suspension of real property tax in certain instances; VAT credits to all businesses for the retention of employees; reduced taxes on airline tickets and/or hotel room rates for a six-month period to incentivize travel; and a waiver of penalties for late VAT payments.
The plan stresses the need for the use of tax incentives in order to keep the greatest amount of Bahamians employed.
“We must keep labor employed as much as possible,” the plan states.
“Government must provide businesses, e.g. hotel and tour companies and related service industries, with tax credits with the requirement that they maintain employment levels and pay their staff.”
The plan also calls for the development of food security programs for The Bahamas, as the country imports 90 percent of the food that is consumed.
The plan even calls for the issuance of long-term bonds to fund food development programs, especially through the Bahamas Agriculture and Marine Science Institute (BAMSI).
“The government should take $250 million and invest immediately in real food security,” the plan states.
“BAMSI is a good model, but Andros is primed for growth in agriculture. Both agriculture and fisheries present much potential.
“Harnessing this potential is not optional. We must develop our long-term aspirational goals and build upon the success of BAMSI. We suggest BAMSI continue its education role, but also build a research and advisory team to consult with large-scale and urban farm development. In the short to medium term, BAMSI must continue its production component.”
Cooper said that with unemployment set to hit 30 percent, a deficit of $1 billion and Bahamians unprepared for disruptions to their income, this plan has to be put in place quickly.
“The problem with the current economic backdrop and mounting job losses, is that the vast majority of Bahamians are woefully unprepared for any disruption to their income going into recession,” he said.
“As job losses mount, a virtual spiral in the economy begins as reductions in spending put further pressures on corporate profitability. Lower profits lead to higher unemployment and lower asset prices until the cycle is complete, whatever that ‘complete’ looks like.
“We believe the economic fallout from the COVID-19 pandemic will have severe implications on the finances of The Bahamas for the foreseeable future.”