Declaring that the prime minister has no "lawful authority to roll back any taxes" despite his claims that he will do so, Fred Smith, QC, attorney for the Grand Bahama Chamber of Commerce, forged ahead yesterday with a legal action against the government and the Grand Bahama Port Authority over what he termed "illegal taxes" imposed on Freeport last year.
The filing of an originating summons by Smith on behalf of the chamber came a day after Prime Minister Perry Christie confirmed that he would in fact remove taxes imposed in the Freeport area by the government last year in light of commitments made by major companies in Grand Bahama to "expand their involvement" there.
Freeport licensees had long been asking the government to remove a number of fees imposed under last year's budget, including an environmental levy, a processing fee and stamp duty, on the basis that they were unlawful given their rights under the Hawksbill Creek Agreement.
However, Smith said that Christie's comments, made at a press conference, were of no comfort to the licensees of Freeport.
"The prime minister does not have the lawful authority to 'roll back' any taxes," Smith said.
"The customs management regulations were unlawfully passed by Parliament and this is not a matter where the prime minister or an FNM or PLP government is doing Freeport a favor by dispensing with taxes; Freeport is customs duty exempt until 2054.
"We don't know whether he intends to have Parliament pass a law repealing the Customs Management Act, or if Parliament is going to refund all of the taxes paid for a year by all the licensees, or how long the government is proposing that we be exempt from these taxes. All of this is up in the air because there is a continued failure by the government and the port authority to recognize the fundamental and pivotal partnership and role with the licensees."
Smith added that it was unclear from Christie's comments whether his promise to repeal taxes would only be to the benefit of major companies in Freeport who are expected to expand their investment on the island, or if small and medium-sized licensees would also be subject to the removal of the taxes.
The Callenders and Co. attorney's approach to the matter yesterday was somewhat different to that of the Grand Bahama Port Authority, which governs the Freeport area. In a statement, the GBPA "applauded" the government's decision on the taxes.
"It is with great pleasure that the Grand Bahama Port Authority can now confirm the full extent of past and ongoing discussions with government regarding future economic expansion in Freeport and Grand Bahama. GBPA applauds the prime minister and his Cabinet on their formal decision to roll back the new customs and other fees levied in the 2013-2014 budget last July, in consideration and agreement with major entities to expand their involvement in Grand Bahama. GBPA is grateful to the prime minister for his extensive personal attention, as this will assist in the creation of hundreds of new jobs on the island of Grand Bahama."
Sarah St. George, GBPA vice chairman said; "In the best spirit of the Hawksbill Creek Agreement (HCA) and to promote the economic development of Freeport, we have worked very closely with the government these last months to achieve a happy and promising blueprint for future capital expansion in Freeport.
"We have established an amicable framework for close ongoing interaction between the government, GBPA and stakeholders in Freeport. Going forward from here, I am confident that all our discussions will be in the same vein and as productive and definitive as this decision."
Smith criticized the approach taken by the GBPA to the issue of the controversial taxes.
"If there have been talks between the prime minister and the port authority, well that's all well and good, but it would've been much more productive if the licensees were part of those discussions so that the interests of the licensees, which are different from the port authority, could've been taken into account," he said.
The attorney, who is currently engaged in several legal battles against the government, suggested that it might not be too late for the government to avoid the Freeport legal fight.
"I urge the government and the port authority to forge a working partnership with the licensees to ensure that we spend our energy positively and not in negative court and public relations fighting."
Obtained by Guardian Business, the originating summons filed by the GBCC lists the GBPA as among a group of defendants including the prime minister, in his capacity as minister of finance; Charles Turner, comptroller of Customs; and Senator Allyson Maynard-Gibson, as attorney general.
It seeks a number of "declarations" from the court on behalf of licensees. In addition to those relating to the illegality of the imposition of the environmental levy, processing fee and stamp duty, the action also calls for the court to inquire into what "restitution" may be offered to the licensees in the form of taxes paid over to date, and what damages they might be owed.
Listed as plaintiffs in the originating summons are 14 companies: Bahamian Outdoor Adventure Tours Limited, Barefoot Marketing Limited, Benchmark Consulting Services, BWA (Freeport) Limited, Callenders and Co.; Candid Security Limited, Flying Fish Restaurant, Freeport Gases Limited, Guardian Fencing and Shutters, Keen I Media Limited, Kelly's Freeport Limited, Sheffields, Smith Point Limited, and VTrade Company Limited.
Many businesses complained about the imposition of the taxes last year, suggesting that they were not only unjustified, but were placing a major additional financial burden on their operations at a time of considerable economic difficulty.
Guardian Business has repeatedly been told by a number of sources that one of the causes of the delay in the action being filed, after it was first threatened last year, was a difficulty in garnering a sufficient number of businesses who would be listed as plaintiffs in the action given concerns over possible reprisals for challenging the government's stance. It is understood that many more businesses than are listed have provided financial support to the GBCC to move ahead with the action.
In a separate statement on the filing of the legal action, GBCC President Barry Malcolm said that the taxes have caused local businesses to "express doubt about their future in Freeport".
"Our mandate is to seek clarification through the courts on the viability of the Hawksbill Creek Agreement as the platform for conducting and promoting the business of Freeport and whether or not the rights of licensees were encroached based on the existing agreement," he said.

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