Excerpts from the PM’s Address
The ultra-exclusive Baker’s Bay is proceeding with a $105 million capital expansion that will ultimately be a $2 billion investment project with 900 employees at full build out. To ensure additional employment for Abaconians, the developers are also embarking upon a skills training programme in conjunction with the Government.
Abaco Club at Winding Bay
Members of the Abaco Club at Winding Bay recently joined with Southworth Development Company as the new owners of the resort and have committed to a $348 million expansion.
Matt Lowe’s Cay/Aman Resorts
MLCSD Limited has acquired the 50-acre Matt Lowe’s Cay for construction of a high end Aman Resort property in the Abaco Cays with 800 jobs generated in the hard construction phase and 200 permanent jobs when operational.
Grand and Baker’s Cays
Seneca Industries (Bahamas) Ltd has acquired Baker’s Cay and Grand Cay in the Abacos for development of an eco-friendly resort and marina. This would provide a much needed economic stimulus for the nearby North Abaco community of Grand Cay and other settlements.
Adjustments to Custom Duties
Mr. Speaker, we can begin to pay back to the Bahamian people some portion of, though definitely not all of, the dividends from the successful VAT regime. It is clear that we must responsibly allocate a significant portion to other priorities, including fiscal consolidation and the reduction of the Government debt burden.
In this context, it will be recalled that, at the time of the last Budget Communication, I had indicated that it would be prudent to await evidence on the revenue performance of VAT in early 2015 before considering any tariff and excise reductions. In light of our experience and the projections ahead of us, I am now announcing a number of such reductions:
- There is the outright elimination of duty on several items, including medical equipment and supplies, bicycles, burglar alarms and audio visual equipment used by churches;
- Duty rates will be reduced on certain imports such as canned and frozen vegetables;
- The maximum rate of duty on motor vehicles is being reduced from 85 percent to 65 percent.
- Taxicab owners will be relieved to know that they can now import, duty free, used vehicles up to three-years old as opposed to the current restriction to new cars only.
- That said, for environmental and safety reasons, we will ban the importation of wrecked vehicles, and the importation of vehicles of more than 10 years of age. We are also proposing a two-year exemption on customs duty for building materials used to repair small homes and buildings in certain depressed parts of New Providence.
- We will also extend the exemptions under the Family Island Development Encouragement Act by an additional year and include Abaco, the east and west sections of Grand Bahama, Eleuthera and Bimini under the exemptions.
- The City of Nassau Revitalization Act is also being extended for another year.
All of the foregoing tax incentives mentioned are aimed at spurring economic growth, creation of jobs building repairs and improvement of living conditions.
Real Property Tax
As we modernize the real property tax administration we fully expect that, through better compliance and more equitable treatment of property owners, we will be able to offer Bahamians tax relief through lower tax rates, while still improving revenue yields. To do so, the strengthened compliance tools and the modernized administration platform are critical. The proposed amendments to the Real Property Tax Act will begin to give some relief to homeowners and businesses as well as strengthen compliance and enforcement.
The following are some of the relief measures that we propose in this budget:
- A reduction in the top tax rates on owner-occupied residential properties with attached rental units
- More pronounced property tax relief for pensioners in mid-value properties
- Introduction of a 10 percent discount for residential property owners who pay their taxes early each year; and
- A harmonization in commercial property tax rates at a lower level of 0.75 per cent.
Honourable members will also see a reduction in the maximum rate for business license fees from 1.75 per cent of turnover to 1.5 per cent, as well as reductions in rates for agriculture and fisheries operated businesses and for independent fuel distributors in the Family Islands.
As we push for more Family Island enforcement, local government districts will be empowered to assist with property tax collection and will be able to share in some of the proceeds to fund capital improvements in their communities.
In addition, as we promote further harmonization with VAT, the Stamp duty on all real estate transactions is being reduced to a lower, single tax rate of 2.5 per cent. VAT will apply in place of the higher rate but only on transfers valued above $100,000. Effectively, a 10 percent tax will remain on residential transfers above this value, but those below $100,000 will see notable savings when compared to the current tiered stamp rate structure.
First-time homeowners who qualify will be exempt from the payment of VAT.
The substantial elimination of Stamp duty will also provide a tremendous stimulus to commercial real estate transactions, as VAT registrants will be able to claim credit for such transfer costs, whereas they cannot do so for the current Stamp tax, which can amount to 10 percent on high value transactions.
We also hope to stimulate more investments by Bahamians, particularly in the Family Islands, on what in many cases will be VAT exempt transactions with much lower stamp duty when the purchases are less than $100,000. This measure also supports those personal acquisitions in New Providence intended for affordable homes development or as modest investments.