Approach to OECD list must go beyond semantics

The Bahamas and twenty other countries were recently singled out by the Organization for Economic Co-operation and Development (OECD) on the premise that their residence by investment (RBI) and citizenship by investment (CBI) schemes pose a high risk to the integrity of the Common Reporting Standard (CRS) regime. This adverse listing followed the analysis of over 100 CBI/RBI schemes by the OECD.

In what was termed as the clamping down on CRS avoidance through CBI/RBI, the OECD asserted that it is seeking to equip financial institutions with tools to help them identify accountholders that may misuse RBI/CBI schemes specifically to avoid the CRS. We submit that this is another classic case of the moving of the proverbial goal posts by international organizations.

The Government must now move beyond the semantics and address this issue for what it really is. The reality is that only 21 out of over 100 countries were placed on this list for high risk CBI/RBI schemes. While the use of the word “blacklist” may be inappropriate or frowned upon, the list is not a positive, complimentary or favorable one.

As part of the OECD guidance, financial institutions are being asked to consider the results of the OECD’s CBI/RBI risk analysis and whether an accountholder has residence in a jurisdiction offering a potentially high-risk CBI/RBI scheme. This equates potentially to additional scrutiny and enhanced due diligence on legitimate economic permanent residents of The Bahamas.

We note that since the release of the guidance, the OECD has issued a statement in which it was asserted that Monaco’s residence and immigration requirements do not pose risks to the integrity of the CRS. This followed the provision of additional information by Monaco and it is expected that the guidance/list will be updated to reflect this.

The Government has an obligation to ensure that the OECD is made aware of the robust and rigorous process in place for the granting and maintenance of economic permanent residence by individuals. This includes a comprehensive due diligence and vetting process to ensure the fitness and propriety of all applicants.

The economic permanent resident programme and second home market are well regulated and pivotal to our economy. It impacts the real estate, financial services, tourism and government sectors with contributions to our nation’s Gross Domestic Product.

We need effective representation and diplomatic collaboration to address this latest attack on our nation’s economy. It is simply unfair and unacceptable for the OECD to place The Bahamas on any adverse list despite our demonstrated commitment to meeting our international obligations.

Arinthia S. Komolafe, Deputy Leader

Democratic National Alliance

EU Blacklist: Time to Change our Approach

The recent announcement that The Bahamas is at risk of being included on the European Union’s list of non-cooperative jurisdictions for tax purposes (blacklist) is both surprising and disappointing. According to media reports, the Code of Conduct Group (COCG) intends to recommend to the Council of the EU, the inclusion of The Bahamas on this infamous list.

In the aftermath of the recent efforts made by the Government to avoid the blacklisting of our nation, it is clear that the age-long practice of international and multilateral agencies continuously moving the goal post is still alive. The Bahamas dodged the proverbial bullet when the initial list was published in December 2017 due to the devastating storms that impacted the Caribbean in 2017.

Since then, our Government has signed on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement. The Bahamas also joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) December 2017. However, these actions have been presumably deemed inadequate by the COCG.

Having addressed the criteria on Transparency and Anti-BEPS Measures, it remains unclear how the Government intends to address the issue of Fair Taxation as highlighted by the EU. In the EU's assessment of Fair Taxation, consideration is given to the absence of a corporate tax or application of a nominal corporate tax rate equal to zero or almost zero by a jurisdiction.

It is unfortunate that external pressures have put us in a position in which we are being compelled to address our system of taxation and chart the course for the financial services industry going forward. However, we have an opportunity to carry out comprehensive tax reform with due regard for the introduction of a more equitable and progressive tax system for our people.

Tax reform in The Bahamas should not result in an increase in the overall tax burden on Bahamians. The overall net effect of this reform should not complicate the ease of doing business or increase the cost of doing business in The Bahamas for Bahamian businesses. We are already burdened by several taxes, fees and levies without the necessary prudence, accountability or improved infrastructure to show taxpayers. Due consideration should be given to the reclassification or modification of existing taxes. A prime example is the business licence tax which is currently assessed on gross revenue rather than net profit.

The evolving and shifting goal posts for compliance with international standards have nurtured a reactive rather than a proactive approach to our nation’s financial services industry over the years. We have found ourselves in survival mode rather than being strategic in planning for the repositioning of the financial services industry. It is time to turn this around for our own benefit.

Rather than just focusing on the short-term goal of avoiding blacklists, a Financial Services Growth Action Plan (FSGAP) should be developed. This plan must be holistic while leveraging our strengths and the expertise of Bahamian professionals. The DNA stands ready to assist the Government in the development of a plan to ensure financial services growth inclusive of the crafting of a fair and equitable system of taxation for Bahamians.

Arinthia S. Komolafe
Deputy Leader, Democratic National Alliance

Where’s The BAHAMIAN Plan?

In the eight short months since taking the reigns of governance, the Minnis administration has seemingly adopted the same late again, and foreigner dependent style of governance made popular by the Progressive Liberal Party during their last term in office. Despite its many campaign promises the government has failed to put forward any plans designed to meet the needs of the citizenry and have instead focused its efforts on fast tracking legislation which satisfy foreign interests and bend to international pressures.

First, the government set an aggressive 2019 timetable for the Bahamas’ accession to the WTO, which has left little time for local businesses to prepare for impending changes to the business climate. Second, under the guise of encouraging new industry, the government all but declared war on Bahamian businesses in 2017 by fast tracking the problematic Commercial Enterprises Bill, which will allow large foreign interests to compete with Bahamians. However, eighteen days into the New Year, and eight months into its administration, Bahamians continue to wait with bated breath for the Minnis administration’s highly anticipated economic plans to move Bahamians to the front of the economic line.

As a party, the DNA had hoped that by now this government would have revealed plans to bolster Bahamian ownership of our economy, improve employment, and spur economic growth through tangible means such as (1) a flat rate Business License scheme, (2) reduction in mortgage rates by 50%, (3) reduce the cost of power by 50%. Instead we’ve heard more of the same tired rhetoric, much of which continues to depend heavily on foreign investment rather than proactive changes to make the Bahamas for Bahamians.

After five years of a government which ignored the will of the people, Bahamians everywhere believed the FNM when they promised that it would finally be THEIR time, but is this what the people’s time looks like?

Christopher Mortimer
DNA Interim Leader

Setting the Tone on Marijuana

The past 24 hours has seen social media explode with public opinion regarding the possible decriminalization of marijuana in the Bahamas. The chatter comes ahead of a planned CARICOM sponsored meeting designed to obtain information on the social, economic, health and legal issues related to marijuana use and gauge regional opinions on this global issue. While it should be noted that the Democratic National Alliance has been clear on its position, we remain concerned however, that the country’s current leadership has not made its position clear – a reality which paves the way for the narrative on this issue to be written for us.

Now is the time for this administration to clearly articulate a formal position and open the debate so that the Bahamian electorate may have its say on the way forward. Failure to do so, will see our collective voices drowned out of the discussion. This would be a travesty. Rather than allowing external forces to dictate the way forward on this matter, we have the opportunity now to set the tone on this issue and take the kind of action that is most beneficial for the Bahamas and its development.

The DNA encourages the government not to take a backseat approach to this issue but rather to do the necessary legwork to ensure that the will of the people is done.

Christopher Mortimer
DNA Interim Leader

Grandstanding Hypocrites - Commercial Enterprises Bill (CEB)

The Minnis administration’s poorly constructed and unfocused Commercial Enterprises Bill has, in the past two weeks, sparked national outrage and rightly so. The legislation is a complete departure from this government’s promise to facilitate the empowerment of Bahamian entrepreneurs and instead promotes the interests of wealthy foreigners. International economic models have proven time and again that the theory of trickle-down economics being pushed by this administration simply does not work. The idea that this sham of a legislation will somehow expand the middle class or create opportunities for Bahamians will undoubtedly fail, leaving our already fragile economy in a more precarious state. The legislation in its current form is so problematic that even the former PM and Leader of the FNM Hubert Ingraham felt compelled to warn the government to rethink their plans.

Rather than the same old outdated, and FDI-reliant policies, The Bahamas must implement country first, SME focused economic model which strengthens Small and Medium Size Bahamian Enterprises. This is the kind of policy that has proven to be the growth engine of every strong economy. The DNA has long advocated policies which provide incentives for such entities including a significant reduction in the cost of capital, and an overhaul of the currently regressive business license structure to a flat rate structure which allows business to keep more of the money they earn. Coupled with plans to drive down the cost of energy and improve the ease of doing business such policies would quickly usher in an era of economic prosperity for all Bahamians.

In the face of well-placed criticism of the Commercial Enterprise legislation, Finance Minister Peter Turnquest and others in the Minnis administration have doubled down, insisting on pursuing the same visionless course of action which has stagnated economic growth in this country for years. Equally disappointing, has been the reaction of the official opposition who, after failing in five years to stimulate any real economic growth, is now filled with righteous indignation and are threatening to repeal the bill if returned to office. In the face of the PLP’s dismal record on the economy however the PLP leader’s threats ring hollow and are eerily reminiscent of similarly empty threats about Baha Mar made by the PM while in opposition.

Bahamians no doubt found it curious to hear the Finance Minister condemn the assertion of a repeal as unfortunate, dangerous and harmful to investor confidence when the leader of his own party just months ago threatened to execute a quote, unquote real sale of the largest investment in the country. Where was Mr. Turnquest’s rebuke of those statements then, where was his outrage? The DNA admonishes both the Government and Opposition to abandon this exercise in political grandstanding and work together, putting country and Bahamians first, to find real dynamic solutions to pull the country out of the economic doldrums.

Christopher Mortimer
DNA Interim Leader

Hurricane relief efforts should be Prudent, Pragmatic, Logical and Holistic

The Democratic National Alliance (DNA) joins the rest of the nation and the world at large in prayers for persons that have been displaced, dispossessed or impacted in some form by Hurricanes Irma and Maria. We are mindful that the devastation left in the wake of these storms has affected individuals both at home here in The Bahamas, the Caribbean region and the United States.

In the midst of the challenges we all face in rebuilding, it is imperative that a prudent, pragmatic, logical and holistic approach is adopted. In this regard, we note with interest the commitment made by Prime Minister, Dr. The Hon. Hubert A. Minnis to accommodate Dominican students into the Bahamian school system in the aftermath of Hurricane Maria’s catastrophic impact on the island of Dominica. We, in the DNA pledge to support reasonable and realistic proposals made by the Government that are aimed at assisting our Caribbean neighbors who have been devastated by natural disasters during this hurricane season.

It is the DNA’s position however, that any policy position taken on providing relief must be organized, well thought out and articulated to the Bahamian people to ensure the best possible outcome without further worsening socioeconomic conditions within our nation or negatively impacting persons that are meant to benefit from such a policy. According to reports, the Minister of Education had not been initially briefed on the Prime Minister’s commitment to the Prime Minister of Dominica, Mr. Roosevelt Skerrit to determine in conjunction with the Minister of Immigration (who had been briefed) the logistics or details of the Prime Minister’s commitment.

In this regard, we propose that every effort to provide relief to our regional brothers and sisters is outlined in a detailed proposal including: the duration of the proposal, place/islands of accommodation and the schools under consideration to facilitate the administration’s proposal. Additionally, the DNA would like Prime Minister Minnis to indicate the number of individuals (adults & children) that will be accommodated, the timeline for delivery of the list of persons to be accommodated, the process for screening the persons on the list and provision of the requisite details to the public on the policy regarding the bypass of our nation’s immigration laws and standing policies. More importantly, the DNA request further details on what if any monetary contribution will be made to accommodate this temporary policy and which line item of the national budget will be impacted as a result.

It is with regret that we acknowledge that mid-way through this hurricane season, the Caribbean region has been deeply impacted by these catastrophic storms during strained economic times. We support the government’s decision to provide reasonable and timely relief to countries impacted by these storms including Antigua & Barbuda, Turks & Caicos, Dominica and indeed our very own brothers and sisters in the southern islands of The Bahamas. We must also be mindful of the fact that there are still citizens in the central and northern Bahamas coping to put the pieces of their lives together after the passage of Hurricanes Joaquin and Matthew.

In this regard, the socioeconomic and psychological impact is real for both Bahamians and some of our regional brothers and sisters alike. Hence, it is incumbent upon the Prime Minister and his administration to take a comprehensive approach in arriving at a final policy position which includes collaboration with the Ministers of Education, Immigration, Foreign Affairs, Health, Social Services and Labour at a minimum.

Additionally, The Bahamas’ approach to disaster relief should be reasonable and calculated and delivered in the most efficient way possible to ensure a successful adjustment for both Bahamians and our proposed guests.

Finally, we strongly suggest that efforts to assist the region should be co-ordinated through CARICOM to avoid cherry-picking islands to assist, to reduce duplication of efforts and to ensure the best delivery of aid to our neighbors. In this sense, we expect our government to take the lead on such a measure. We cannot emphasize the fact that our response to the recent natural disasters that have impacted our region must be coordinated and should involve our allies in the region to ensure that the burden is borne proportionately.

Arinthia S. Komolafe