September 02, 2013
Bahamian Brewery and Beverage Company, the producer of Sands beer, has accused its main rival of lobbying the government to increase taxes on its operations to deplete its competitiveness in the local market.
Although without any specific evidence to support his claim, Bahamian Brewery and Beverage Company CEO Jimmy Sands told Guardian Business that he views the government's move to raise his taxes while leaving Commonwealth Brewery's unchanged as simply "unfair" and "anti-Bahamian".
Sands was speaking in the wake of an announcement by the government that it would seek to adjust upwards the tax burden his Freeport-based company faces.
Highlighting his frustration at the move, the businessman noted that Heineken and Guinness producer Commonwealth Brewery enjoyed an extended period in which it benefitted from a $6 spread between the duty on a liquid gallon of its domestic beer sales and the duty on imported beer - its main competitor. Heineken International acquired Commonwealth Brewery in 2010.
"For 20 years the Bahamian people subsidized that brewery indirectly. I'm only running on my sixth year with a $3 spread - half of what they had - and now they want to take it from today's present rate."
Sands pays $2 per liquid gallon in tax on domestic beer sales, while Commonwealth Brewery pays $5 per liquid gallon. Following a meeting with Sands at the Ministry of Finance last week, the government is proposing to increase Sands' tax liability to $3.50 per liquid gallon.
"I put a first class brewery up here, state-of-the-art, run by Bahamians, and it has been successful. We're just in our sixth year, and yet the government is being pressured by the big international crowd because it was their intention to control and dominate the liquor industry in The Bahamas," said Sands.
"Now they want us to have just a $1.50 spread between this little island boy, and the global giant. Plus I'm in Freeport and I have to ship my product to Nassau. It's gross victimization. The Bahamian is getting slammed again."
Sands suggested he never would have expanded his brewery operation over the years had he known such a tax burden was in the offing, having spent a total of $27 million on the plant.
"I'm here using the rules of play and now they want to change the rules. It'll put me out of business, simple as that."
In the meeting with Ministry of Finance officials, Sands said he proposed that if it is revenue the government is seeking to gain, it should increase both the Bahamian Brewery and Beverage Company's tax burden and those which apply to Commonwealth Brewery.
In this way, the Sands producer's competitive advantage - the spread on duty - would have been maintained while still allowing the government to also up its revenue intake.
"I said if you want to gain revenue, put me up a dollar and put them up a dollar - keep the spread. They refused to do it.
They are paying more attention to these foreign people than to their own Bahamian entrepreneurs.
I understand that the government needs money, but my God, you've got to do what's fair." Sands immediately cancelled a scheduled construction contract signing that was due to take place on Thursday as a result of the government's tax announcement.
The contract would have seen his Freeport storage premises expanded by 25,000 square feet.
Efforts to reach Ministry of Finance officials and Commonwealth Brewery were unsuccessful up to press time.
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