Hon. L. Ryan Pinder /Member of Parliament
Elizabeth Constituency /Business License (Amendment) Bill 2010 Presentation – January 19, 2010
Mr. Speaker …
Today I am honoured to rise on behalf of the good people of the Elizabeth Constituency. I would like to thank my constituents for having the confidence in me to speak on their behalf. Today we find ourselves in this honourable place to clean up the sloppiness and poor drafting of a Bill that we passed just this past summer.
Poor Legislative Agenda
Mr. Speaker, this Amendment to the recently passed Business License Bill is because this Government felt it necessary to push through legislation that was poorly drafted, and without public consultation. Mr. Speaker, this has been a trend with this administration, at least since I have been a member of this honourable place representing the interests of the constituents of Elizabeth.
We saw this in the Forestry Bill where its application was simply impractical as brought to the House. We saw this in the recent resolution regarding the land in the Baha Mar deal, where the map was incorrect. Mr. Speaker, this Government owes it to the Bahamian people to be complete and accurate in its representation, not rushing things to this place to brag about some poorly conceived legislative agenda.
Business License Amendment
Mr. Speaker, if this Government was a Government of the people, and consulted the private sector prior to rushing this legislation through Parliament, this amendment would not be necessary. All of the Amendments we debate here today are a direct result of the protest from the private sector at town hall meetings that occurred AFTER the Bill was passed. Effective governance means consultation with Bahamians BEFORE major legislative changes, not after the fact. Mr. Speaker, I attended the town hall meeting hosted by the Minister of State for Finance, one which the private sector expressed extreme disappointment towards this Government, and the Minister.
But, in my opinion, the primary concern of the private sector has not been adequately addressed. There was a lot of discussion and concern about the definition of “turnover”. This Amendment provides some revisions, however, there is still uncertainty on what is included in turnover. The definition provides:
“turnover” means the total revenues in money and money’s worth accruing to a person from his business activities within The Bahamas during the preceding year or in such other accounting period as the Secretary may allow, including all cash, credit sales and commissions without any deductions whatsoever; and, for hotels, turnover shall exclude tax collected.”
There is much concern, especially in the services industries, on the use of the word “accruing” and inclusion of receivables that have been billed, but not collected. What happens if these receivables cannot be collected, will there be a subsequent credit, not according to this Bill.
Mr. Speaker, there is also curious additions to this Amendment. The Business License rate schedule provided the lowest rate (1/2 of 1%) on industries that as a public policy we want to preserve and promote, historical industries such as agriculture, fisheries, and food processing. The public policy for this is obvious and something I fully support. What I found interesting was the additions to this schedule, offering the most privileged rates to construction companies; hotels; wholesalers of petroleum products; and wholesalers of food products.
It seems to me that this Government has extended the preferential treatment of cherished industries in our country to special interests. Why would you extend this preferential rate to construction companies, except for the fact that the largest construction companies are generally supporters of the FNM. We know who the largest hotel operator supports. I ask, why have these industries been included in a preferential business license rate generally reserved for historical industries in this country that we want to promote as a matter of public policy? Enough with the catering to special interests, govern for Bahamians, ALL Bahamians. An alternative would be for a reduced business license fee for small, growing companies in this industry, rather than the large special interests that don’t need it.
Recommendations to the Bill
Mr. Speaker, when we originally debated The Business License Bill (2010) I made some suggestions, and I generally would not want to repeat them, except my suggestions were exactly what the private sector was asking for at the town hall meetings. Suggestions not addressed in this Amendment.
1) Taxation could be based on gross profit of the business. There is a reality that different businesses have different profit margins. For example, a convenience store might operate at a 15% profit, while a clothing store might operate at a 40% profit. To tax on gross revenues, or turnover, would be unfair to the lower margin business. A business license structure that taxes on gross profit rather than gross revenues might be more equitable. This would also allow for the allowance for incentives through credits and deductions for charitable contributions, benefits awarded to employees, and the expansion of jobs within a business.
2) The coordination and blending of taxes already paid by businesses – for instance, customs duties on goods that are ultimately re-sold and business license fees on transactions of goods that have already been paid by a Bahamian company. Any tax system should have the goal of being fair and equitable, while maintaining the integrity of the Government’s revenue collection. It is a difficult balance, but under our taxing system we should be cognizant of total taxes paid by businesses, and more specifically, small businesses in this economy. This appears to be done with respect to hotels, but what about the other businesses in the Bahamas, and specifically what about the Bahamian owned businesses in the Bahamas? Why leave them out?
Lack of Commitment to Business
Evidence suggests that this Government is not committed to private business and entrepreneurism in the Bahamas by Bahamians.
Ease of Doing Business
A clear example of this is that the last three years that this FNM Government has been in power, the Bahamas has fallen in the ease of doing business measurements as compared to other countries. We have fallen from being ranked 59th in the 2009 report, to 71st in the 2010 report, to 77th in the recently released 2011 report.
Mr. Speaker, this is a trend that speaks for itself about this Government’s lack of commitment to the advancement of private business in the Bahamas. It is a failed agenda, an agenda that has had a deteriorating effect on the Bahamian economy, a deteriorating affect on Bahamians. Evidence of a lack of commitment to empowering Bahamians. Mr. Speaker, under a PLP administration we were better in governing for private business, and in the next PLP administration we will be better yet again.
Mr. Speaker, I would suggest, and a PLP Government would have made legislative and policy reform to promote business a top priority. Instead of debating Bills that don’t have a direct effect on Bahamians and their economic security, we would have ensured that the necessary reforms were accelerated to address the need for private enterprise to succeed, and to do so without unnecessary Government bureaucracy. We in this Honourable House should, and a PLP Government would, commit to an immediate suite of legislation to assist business owners. I would have liked to see the much-promised Small Business Incentive Legislation tabled and debated early on this year. I continue to call for this legislation, but it is nowhere in sight. Business owners, and prospective business owners in the Bahamas deserve the attention of this House, the attention and all legislative benefits as possible. Business owners deserve more than piece piece legislative process, they deserve a comprehensive suite of legislative reforms. Bahamians deserve more.
Mr. Speaker, this Government’s failure with the promotion and advancement of business in the Bahamas is not only proven in the continued free fall in the ease of doing business index, but these failures are evident in other indices.
Global Financial Centers Index
The most recent publication of The Global Financial Centers Index released in September demonstrates the erosion of the Financial Services Industry of the Bahamas. The Financial Services Industry of the Bahamas as compared to other countries fell five spots in the rankings. What is more alarming, is that as compared to the top 10 Offshore Financial Centers, the Bahamas lost more rating points than any of its competitors, and as much as twice as many rating points as some of its competitors. In my opinion, this lost ground is directly attributable to the last three years of miss-management of the industry by this FNM Government and those Ministers with direct oversight.
An example of miss-management and disregard of the Financial Services Industry by this FNM Government, however, began shortly after the General Election when this FNM Government dismantled the Ministry of Financial Services. The Ministry of Financial Services under the PLP government was responsible for providing leadership and direction in restoring The Bahamas to the pre-eminent position it once enjoyed as an international financial and banking centre. It was to be the policy arm of the industry, and would have been directly responsible for addressing, in a focused manner, the challenges that the industry has faced in recent years.
Mr. Speaker, I am not alone in this observation. One of the most well respected attorneys in the Bahamas, a Queens Counsel who is known for his expertise in financial services matters echoes my observations that I have been making for the last couple of years. The PLP recommends that this Government immediately re-constitute the Ministry of Financial Services to provide focus and dedicated leadership to the industry. The Government should also articulate and implement a clear and transparent policy on the expansion of the industry. It is important to develop strategy to re-define the industry so the Bahamas is no longer known as a Tax Haven, not solely an Offshore Financial Jurisdiction, but an International Business Jurisdiction. We require the development of a strategy for an expanded commercial Financial Services Industry and significant economic policy reform.
Mr. Speaker, I recently received an alarming phone call that demonstrates what the PLP has been saying all along, this FNM Government has no regard for the advancement and empowerment of Bahamians. Mr. Speaker, I am talking about our cherished fishing industry. I have direct access to many of the fishermen who are out on our high seas, and the Minister of National Security can tell you that whenever I am aware of poaching or other incidents on the seas, I contact him directly, without making the issue political. I do this because I want to see our Bahamian fishermen protected, and given every opportunity to succeed in their industry, and I want to see the preservation of our fishing industry, free from threats of illegal poachers from countries such as the Dominican Republic.
Mr. Speaker, the Minister of National Security has to start taking this issue seriously. My uncle is out on the seas, being shot at by illegal Dominican poachers. My uncle, my family, being shot at – your constituent Mr. Speaker, being shot at. I am told Mr. Speaker, that the Minister of National Security stated in a public forum that the agitation by the Bahamian fishermen is political rhetoric designed to solicit votes in favor of the PLP. Mr. Speaker, with all due respect, there is nothing political about protecting the lives of Bahamians, nothing political about ensuring that my uncle is not shot at by illegal poachers.
Mr. Speaker, this is a serious matter. I am told that during the last fishing trip, yes the Defense Force was successful in catching two vessels, but there were as many as 8 additional foreign vessels fishing illegally in our waters at one time. In fact, one of these Dominican vessels actually approached a Spanish Wells fishing vessel to see if they could get their spear gun repaired. The boldness of these criminals in our waters is remarkable. Mr. Speaker where is the protection for our Bahamian fishermen, where is the reassurance that this industry will be protected.
See, what we have to realize, not only are our Bahamian fishermen at risk, but the entire industry is at risk, when the poachers fish our waters, they do so without discrimination, they take juvenile fish, conch and crawfish, decimating the future of our industry. Something has to be done, and now, stand up and protect our Bahamian fishermen. Do something that has an impact, this Government wants to fine Bahamians $300 for not wearing seatbelts, but fine illegal poachers $250. Something is wrong here, it is time for this FNM Government to value Bahamians industries, Bahamian citizens and protect them at all costs, do something drastic, do something aggressive. Instead of sending your general from Freeport to ask questions of the Spanish Wells fishermen, the Member for Mt. Moriah, Minister of National Security, go to Spanish Wells and speak to the fishermen on what you can do, they don’t bite, and they will welcome you. Protect our Bahamians at all costs, this is your job as the Government.
Mr. Speaker, the business persons in here would know that in order to succeed you must ensure that your business is fiscally sound and well managed. Mr. Speaker, the success of a country is no different, prudent and effective fiscal management is required.
Not too long ago, the Prime Minister admitted that the Bahamian Government is borrowing to pay the salaries of civil servants. The deficit year after year is increasing at an alarming rate. The debt of the country seems to be increasing exponentially, yet there are no plans put forward on how this Government will address this concern. We are all concerned about the growing debt, I believe even the Prime Minister is concerned about the growing debt.
There are only two ways for a Government to pay down the debt, generate a surplus, which the Bahamas Government hasn’t done in over a decade, or sell assets of the State to pay debt, something we are currently witnessing with the proposed sale of BTC, although it seems at the end of the day, not to much debt will be paid. Speaking of such, Mr. Speaker, I am troubled by the Prime Minister’s recent declaration that the proceeds from the BTC fire sale will be used for the national debt. Mr. Speaker, the Prime Minister gave no details as to how these proceeds will be used. Will it be used to service the Public Debt, in other words pay towards interest owed, or will it be used to pay down the Public Debt, in other words the principle of the debt? What we do know, however, is the fire sale will cost Bahamians some 300+ jobs. Given such consequences, we DEMAND – how will the BTC money be used??? If it is not used the right way, this will simply be another wasting of a valuable asset, which in and of itself should produce tens of millions annually by way of dividends, at the expense of Bahamian workers, and future Bahamians.
Mr. Speaker, a contributing factor to the uncontrollable deterioration in our fiscal affairs is failed budget projections, failed taxing strategies, failed revenue generators. The PLP Parliamentary Caucus in their communications on the Budget for this fiscal year, made note on the inaccuracies of the budget projections of this FNM Government. Specifically, in my Budget Communication I made note that this Government has had a trend of inaccurate budget projections– underestimating expenditures and over estimating revenue. The FNM Government in the current fiscal year forecasted that expenditures will remain at the same level from one year to the next, and that they will increase revenues by an astonishing 197,000,000 dollars. This is despite that The Bahamas over the last decade, even in the best of times, never achieving this growth in revenues. They were going to do this by increasing taxes on the Bahamian public – the notorious tax and pain budget. My constituents in Elizabeth recall these tax increases all too well. They feel them every day – the trend of pilling on the backs of Bahamians, without providing a clearly defined future for their success.
Mr. Speaker, one only has to look at the report of the Central Bank of the Bahamas to see how this FNM Government has failed in its fiscal policies. “Government’s overall deficit position widened over the first quarter of FY2010/11, as the rise in spending overshadowed the modest improvement in revenues.” The deficit actually widened by more than $10.7 million, this certainly doesn’t evidence an increase in Government revenues as this Government promised, in fact, tax revenue fell by 1.4%. Likewise Mr. Speaker, this Government has failed in managing the debt of the country, especially as measured against GDP. There is no clear policy to address this growing issue, the Central Bank of the Bahamas points out that “the general weakness in economic activity will continue to constrain near-term efforts at reducing Government’s overall deficit and the debt-to-GDP ratios.” The Government has no solutions.
When recently questioned Mr. Speaker, on the viability of the Government’s strategy with this tax and pain budget, The Member from Marco City answered that it was too early to say the tax policy failed. He said that it is too short a time, and places blame on the economic situation. Well the economic situation was bad in June and is bad now. Of course the global economic climate effected government revenue collections, I made this point in June, and the Minister is just understanding this now? Member from Marco City – your tax policy has failed, failed miserably, failed the Bahamian people. The first fiscal quarter is over, government revenues should have been up $50 million if your budget was accurate, instead they are down. The entire fiscal policy of this FNM Government has failed, the policy of tax, borrow and spend has failed, you have failed – failed the Bahamian people.
Mr. Speaker, I argue that with a policy of economic growth and a true dedication to a National Economic Plan, we as a country can be in a situation where a growing economy can generate the necessary tax revenues, at a lower overall tax rate to Bahamians, to create surpluses necessary to pay down the growing debt burden. Addressing this issue is a significant concern. If addressed in a progressive manner, we would not have to dispose of state assets such as BTC to pay on the national debt. Addressing it in a way that does not result in limited opportunities for Bahamians paying higher taxes is a necessity, it frankly must be done. Mr. Speaker, unfortunately this Government’s trend of failing in governance, failing the Bahamian people give me no confidence. With those observations Mr. Speaker, Elizabeth thanks you for your indulgence.