Allowing a set of tax concessions under the Hawksbill Creek Agreement (HCA) to expire in August would be "premature" and could have an overall detrimental effect on the economic recovery of Freeport and Grand Bahama, according to Shadow Minister for Finance Peter Turnquest.
Turnquest told Guardian Business that Freeport still had "tremendous" potential as a free trade zone, but was concerned that the expiration of some taxes, most notably for business license fees and real property tax, would result in considerable losses in investments made by current Freeport stakeholders.
"Letting the exemptions expire is not helpful. There are those who believe that it will inspire real estate sales, and it may, but it will also have an effect on the value of that real estate. In some respects that may be good for those who are on the lower end and trying to get into the real estate market, but for those who have invested it represents a real loss of investment so I don't know if that is the way to go."
"I believe that Grand Bahama has tremendous potential as a free trade zone. We should develop, support, and promote that. Grand Bahama has only developed to the extent that it has because it has had these incentives. To remove them I believe I believe is premature and I don't believe that that's the way that we ought to be going at this particular stage.
"I believe that we can win some concessions with respect to Hutchinson and to the Grand Bahama Port Authority and I think that's what we ought to be looking towards how do we sweeten this deal for the Bahamian people so that they have more input into the operations of [Grand Bahama]?" said Turnquest.
Prime Minister Perry Christie questioned the success of the HCA given the state of Grand Bahama's economy earlier this month at the Grand Bahama Business Outlook (GBBO), confirming that the government would allow some of the tax exemptions under the HCA to expire in August 2015.
Christie said that he intended to use the expiration as a opportunity to procure a suite of new arrangements to encourage economic development and increase Grand Bahama's contribution to net fiscal receipts. The government has formed a six-member committee to review the HCA and ultimately secure an agreement with the Grand Bahama Port Authority (GBPA) for a long-term economic development plan to promote shipping, industry, tourism, real estate, and other commercial sectors.
Giora Israel, senior vice president for Port and Destination Development for Carnival Corporation and a board member of the Grand Bahama Shipyard limited (GBSL), told Guardian Business earlier this month that the government should consider expanding the HCA blueprint to other family islands, rather than curtail it in Grand Bahama.
"Why don't we have another [free trade zone] in Andros? There should be more of these areas. I know The Bahamas, and in giving those economic benefits will spawn more and more activities. We're for keeping Grand Bahama very competitive and the Hawksbill Creek Agreement, though it ultimately maybe didn't deliver everything it was expected to, [resulted] in one of the biggest port operators in the world with the container terminal and the Grand Bahama Shipyard," said Israel.
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