September 28, 2022
  • September 28, 2022

“Leave us alone and we’ll blow up 2018 GDP”

By on April 11, 2022 0


Editor-in-chief of the Tribune

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Abaco’s economic output will ‘come roaring back and blow 2018 numbers’ if the island’s recovery is freed from constant government rule changes, the chairman of its chamber of commerce said yesterday.

Ken Hutton told Tribune Business it was “incredible” that the Dorian-ravaged island’s gross domestic product (GDP) grew by 55% between 2020 and 2021, according to newly released data from the National Institute. statistics, but claimed he could ‘be so much further along’ in his recovery if there was certainty about the Special Economic Recovery Zone (SERZ) and the tax breaks offered to rebuilding residents and businesses .

The latest confusion, he added, surrounded a ‘no notice’ change which apparently makes VAT and duty payable by anyone who does not have a stamped SERZ certificate from the Ministry of Finance. In addition to the hundreds of applicants still awaiting a response to their certification applications, which were filed before the March 31 deadline, Mr Hutton said this appears to contradict the SERZ relief order which was issued on January 5. of this year.

Article 4 of this decree stipulates that the wholesale and retail sale of all building materials, hardware, furniture, fixtures, electrical and plumbing supplies in a SERZ must be zero-rated until December 1, 2022, “subject to conditions stipulated by the Ministry of Finance.

“Local businesses have not been told how this affects them,” Mr Hutton said of the change. “Until now, they sold materials VAT and duty free at the point of sale. Are we going back to charging VAT and customs duties at the point of sale, and only exempting customers with a certificate? This is not what the ordinance of January 5 and its article 4 says.

“Is that still the case? I don’t know. If not, no one has been notified, and it’s a huge amount of work for retailers and wholesalers here. There must be a double-configuring their systems: some people don’t get the exemptions and some people get them. You have to set up your system like Freeport, bonded and unbonded. It’s not something you can do overnight.

“It’s just another level of unnecessary uncertainty thrown at us when what we need is just to give Abaco the tools, the time and the opportunity, and it will come roaring back and throw the numbers off the 2018 GDP out of the water in very short order.”

Abaco’s 2021 GDP of $345.7 million is nearly 42% lower than the $594.3 million it reached in 2018, thanks to the combined devastating blows of Dorian and COVID-19. However, last year’s production nearly matched 2019’s $393.7 million, when Abaco had eight uninterrupted months before the category five storm hit.

The Davis administration, however, has sought to reduce and contain tax breaks related to Dorian’s recovery, believing it is giving too much, especially to wealthy second-home owners (many of them foreigners) who it says , can afford to rebuild without the help of taxpayers.

Mr Hutton, however, called it ‘jealousy and ignorance’ in a letter he sent on Thursday April 7 to two Abaco MPs, John Pinder and Kirk Cornish, warning of concerns that thrive among islanders and business owners.

He told the two parliamentary secretaries: “We have a major problem concerning a modification of the SERZ regulations. I have just been informed that the SERZ concessions have been changed, without notice, and that VAT and duties are now payable everywhere in Abaco, unless one has the stamped SERZ certificate from the Ministry of Finance.

“The application deadline has passed at the end of March and there are still many applicants who have not received a response. Furthermore, we have been informed that no further applications will be considered even if the applicant does not was unprepared, unable or unable to complete the application by the deadline….

“From what my customs agent told me, the new SERZ regulations will mean that all Abaco retail and wholesale businesses will have to start charging VAT at the point of sale, unless a SERZ-stamped application is made. This unannounced change brings several operational and financial challenges, which involves significant reprogramming of systems,” he added.

“Under the SERZ Ordinance of January 5, it is stipulated that the local wholesale and retail sale of goods within the scope of the schedule must be sold as zero-rated VAT. The changes made, without consulting Abaco’s stakeholders, have a significant and far-reaching impact. The new PLP government came to power promising to consult with local stakeholders, but instead we are still ruled by decree out of the capital by an administration far removed from the people most affected by their policies.

Turning to the broader picture, Mr Hutton wrote: “The stated purpose of the SERZ Concessions from the start was twofold: to encourage reconstruction and to induce the local economy to return to growth. Abaco was first told that SERZ would be in place for three years, which all believed would have been enough to get the economy back on its feet and back on the path to growth.

“The arrival of COVID has caused critical delays in this recovery and set the process back at least a year or more. Additionally, Abaco is now impacted by historic inflation and global supply chain issues, which which makes reconstruction not only more expensive, but also longer.The impression in Nassau that some underserved people benefit more from SERZ than others is based on jealousy and ignorance of the facts on the ground.

“We need the concessions to remain unchanged for at least two years. We are far from having a robust economy. People just struggle to get by. Delays, unannounced changes and SERZ cuts not only add an unnecessary level of uncertainty, but also increase an already heightened level of distrust and resentment towards the government caused by the flagrant mismanagement of the former Abaco Disaster Response Administration.

Mr Hutton, saying he was disappointed not to have received an acknowledgment of his email from either MP, concluded his letter by saying: ‘I don’t think the Abaco community will take this lightly.”