Calling for higher taxation of foreign liveaboard dive boats, the Bahamas Diving Association states that there is "no way" Bahamian dive operations can compete with foreign liveaboard operations at present and as a result opportunities for local business growth are being lost.
This includes opportunities for larger operations like Stuart Cove's, and for start-ups which could support development in the Family Islands.
They argue that the Foreign Charter Yacht Act, established in an effort to encourage foreign commercial charter yachts to base their operations in this country, is being "exploited" in a way the government never intended. As a result, the government is leaving "$5 million in revenue on the table", Stuart Cove told Guardian Business.
The situation will become even more acute, should the government choose to move ahead with VAT, he added.
"We're walking on a razor sharp edge with prices, and we're competing internationally. Luckily we haven't lost any jobs yet, but if you increase it another three or four percent...this could be the straw that breaks the camel's back."
Under the law as it exists presently, foreign boats have to obtain a permit from the Port Department, submit to an inspection, possess liability insurance, pay an annual fee based on the length of their boat of up to $2,500, and pay a voluntary four percent of their gross sale for their charter as well as an additional $50 per dive customer.
Not only is this a low tax yield to begin with for boats which are using local resources and diverted business from local operations, but the four percent of gross sales is easily evaded, added Cove.
The Bahamas Diving Association, in a recent proposal to the Port Department, suggested that in addition to the current licensing fee, any foreign boat should pay $8,000 per berth annually, based on its certification.
"For instance, if the boat were certified to carry 10 divers, the yearly fee would be $80,000 to conduct dive operations," said the association.
In addition, they called for rules demanding that any foreign boat must not conduct any diving operations within 10 miles of any land-based Bahamas Diving Association member; must be based or docked within the Bahamas for at least nine months of the calendar year; and must be a current active member of the Bahamas Diving Association, therefore ensuring they follow the agreed upon standards and in accordance with the Association's guidelines.
Cove told Guardian Business he is confident the additional taxing of foreign boats would not cause any loss in business.
"The government seems to think that if we do this to these boats they're going to go somewhere else, but they aren't because there's not another country in the world that doesn't tax these boats. We don't want to run these people away, but let's even the playing field," said Cove.
However, Bruce Purdy, owner of Blackbeard's Cruises and the Aquacat, which operates liveaboard dive vacations out of a Nassau base, said that The Bahamas is "by far the most expensive" place to operate out of competitor jurisdictions for diving liveaboard operations.
"I only operate in The Bahamas but I know from competitors that the fees are way higher here than anywhere else. Of course, each island has its own set of problems, some that don't exist in The Bahamas, some that do, but the Bahamas is by far the most expensive.
"In Turks and Caicos they don't have the four per cent fee, the food costs are lower. In the Windward Islands and the British Virgin Islands, there are almost no fees down there. A lot of the companies say the licensing fees keep them out of the Bahamas. It's borderline and they say they would very easily go elsewhere."
Purdy said that his company pays a significant amount in tax, unlike some of the U.S.-based operations.
This includes duties on supplies and maintenance equipment, which worked out to around $35,000 in duty last year.
The company also spent around $200,000 on fuel in the Bahamas last year, he added.
"We pay on our food, on our maintenance supplies, we have people working there on the boats. We pay a sizeable amount that the boats coming in from the U.S. don't," said Purdy.
Purdy said it would be a challenge to pay an $8,000 per berth fee on some of the boats he has chartering for Bahamas vacations.
"We have two boats, one with 20 berths and one with 18. Some charter for almost nothing, they cater to inexpensive college groups. These are all people coming into The Bahamas. I think that would put an end to those. That would wipe out their profit for the year," he said.
Other boats will enter The Bahamas for short periods of time in certain months, and therefore a requirement of being based in The Bahamas for nine months out of the year would be a major deterrent, he suggested.
With respect to asking that foreign operations stay at least 10 miles from a local land-based dive operations, Purdy said that his operations try to do this, but in some cases this is difficult to avoid.
"If we have to clear Customs at Bimini or West End (Grand Bahama), our boats are slow and so we would do a dive there before we head back. It might be workable overall, but it would be difficult for us as we would have to cut a couple of days of diving out."
Purdy also suggested that the government would need to be careful not to "scare off" the lucrative charter yacht business from The Bahamas with new taxes, given that many of these vessels, which enter primarily for purposes unrelated to diving, are governed by the same legislation as the dive boats - the Foreign Charter Yacht Act of 1991.
"Most operate out of The Bahamas, most are yachts or large sailboats and they charter for large sums. The government is getting the four per cent; the revenue from these boats is huge. They pay dockage, they have people staying ashore. The Bahamas is getting a lot of benefit from them."
However, Purdy agreed that boat based in the U.S. could "definitely" afford to pay more tax in The Bahamas.
"These boats don't spend any nights in the islands," he said.
Cove, who has for some time been running a training scheme for Bahamians from low income neighborhoods to become dive instructors, said many of those who become certified face stiff competition from foreign operators because of their lesser tax burden and its impact on their pricing.
"Our government panders too much to these foreign entities. They run out of Florida, they use the resources and they pay some minimal fee that is voluntary and then they go back to the U.S. and reload. We pay duties, if we have foreigners we pay work permits, we pay our business tax which went crazy this year; they don't pay any of that."

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