Bahamas News

The Ingraham Administration’s second budget in its third non-consecutive term contains a number of items calculated to help the average Bahamian feel the impact of the fiscal plan for the next budget year.

As a measure to address the steadily climbing cost of the Bahamas Electricity Corporation’s fuel surcharge, Prime Minister Hubert Ingraham on Wednesday announced a two-year suspension on the 17 percent taxes (10 percent customs duty, seven percent stamp tax) on BEC’s fuel imports.

“This is expected to enable BEC to function without further increasing the costs of electricity,” Mr. Ingraham said.

Utilities Minister Phenton Neymour touted the decision as evidence of the government’s commitment to addressing the nation’s energy concerns.

“BEC at this particular time is in a very poor financial state and the government is providing relief to BEC by providing the concession for two years of customs duty that is charged on the fuel – the 10 percent customs duty – and in addition to that we are also providing a concession for two years on the stamp tax – the seven percent stamp tax,” Mr. Neymour told the Bahama Journal.

“[This] adds up to a total concession of 17 percent, which will assist BEC and also assist in reducing the fuel surcharge that customers feel, as the stamp tax is a component of the fuel surcharge that the Bahamian people pay.”

The prime minister also announced in his Budget Communication to Parliament that the 2008/2009 fiscal plan includes a $19.6 million pay increase for the public service, drawing raucous applause from government MPs.

The increase includes the $750 annual increase to the base pay of all public officers, plus a $1,250 increase for each teacher in the public school system.

Education Minister Carl Bethel sought to put the pay raise for teachers in context when he spoke to the Bahama Journal.

“That is pursuant to the industrial agreement, but it reflects, I do believe, the great importance that successive governments, all governments of The Bahamas place upon honouring the sacrifice and the service of our teachers,” Mr. Bethel said.

NASSAU RESTORATION BILL

Prime Minister Ingraham also introduced a Bill for the City of Nassau Revitalization Act, which Mr. Ingraham called landmark legislation. The act is aimed at addressing what the PM called the unacceptable state of urban blight afflicting the downtown area, and it includes incentives like tax breaks intended to generate investment in the capital city over the next five years.

“Concessions available will include exemption from customs duty on all materials necessary for the investment imported into the country, purchased or taken out of bond; exemption from real property taxes on all buildings comprising the investment, all additions thereto and land upon which the investment is situated, and exemption from any excise taxes that might be levied,” Mr. Ingraham said.

“We fully expect this bill when enacted will serve as a catalyst for investment in our capital city, restoring the city centre to its former status as a charming and picturesque capital catering to the needs and tastes of individuals of wide-ranging interests,” he said.

HELP FOR FAMILY ISLANDS

In a similar vein, the prime minister announced the reenactment of the Family Island Development Encouragement Act, which he said would enter into effect on July 1, 2008, with the beginning of the budget year.

For those investing in the named islands, the act will provide duty-free and excise tax-free import of all construction material to be used for the construction of a new building or the rehabilitation, remodeling or extension of a new or existing building, and duty-free and tax-free import of any machinery used for the clearing of land for farming or construction carried out in the named Family Islands.

Those islands are Sweetings and Water Cays (Grand Bahama), Grand Cay and Moores Island (Abaco), Current Island (Eleuthera), Andros, Cat Island, Rum Cay, San Salvador, Long Island, Crooked Island, Ragged Island and Cays, Long Cay, Acklins, Mayaguana and Inagua.

REVENUE MODERNIZATION

Mr. Ingraham also announced the reform of the Customs Tariff, with effect from July 1, 2008.

He said the government is amalgamating the customs tariff rates with the corresponding stamp duty rates, and then extracting those items from the tariff that are treated as excises in international practice and placing them in a new Excise Act.

“These include the luxury items such as perfumes and tobacco and cigarettes, and also high value items such as vehicles and petroleum,” Mr. Ingraham explained. “Basically the sum of the present rates of customs duty and stamp duty will become the new excise rates under the new Excise Act.

“The purpose of this exercise is to follow international practice and also to remove these taxes from any reduction exercise which might be necessary as a result of admission into the World Trade Organization.”

Source: Bahama Journal