NASSAU, BAHAMAS — Prime Minister Dr Hubert Minnis today asserted that his administration’s efforts thus far have positioned the Bahamian economy to “not only recover but thrive” in a post-pandemic world, as he unveiled several revenue and policy measures to be undertaken this upcoming fiscal year under its “Accelerated Bahamas Recovery Plan”.
While delivering the 2021/2022 budget communication in the House of Assembly today, Minnis said: “As we continue to lead the country out of the ravages of this pandemic, we are confident that our efforts thus far have positioned the economy to be robust and sustainable, not only to recover but thrive in a post-pandemic world.”
Minnis noted the government has operated within the parameters of its fiscal targets notwithstanding the many challenges.
He also noted: “We are still contending with grave uncertainty today but my administration’s ultimate objective has not changed. We may have been diverted, but our direction is still clear. To date, the direct cost of my government’s response to the pandemic exceeds $290 million, not including millions in lost tax revenues and economic activity.”
The prime minister noted the Accelerate Bahamas will focus on job creation; small business development; healthcare improvement; tourism development and expansion; public and private-sector investment; and digitization.
He also contended that “notwithstanding the worst economic calamities to befall The Bahamas in its recorded history”, his administration’s “prudent management” has ensured the country’s foreign reserves remain “healthy and robust”.
“The Bahamian dollar has not and will not come under any threat of devaluation as long as this administration remains in office,” he said.
Outlining the government’s revenue and policy measures for the upcoming fiscal year, Minnis noted:
- The government will launch an Employment Incentive Program for businesses. Under this program, businesses will be able to apply for value-added tax (VAT) credits to cover the salaries of 10 new employees brought onto their payrolls. The allowable tax credit will be up to $400 per week. The government anticipates that 250 businesses will participate and that it will forego $40 million in tax revenue.
- The government will make $250 million available to the Access Accelerator Small Business Development Centre (SBDC) over the next five years, starting with a $35 million injection in the upcoming fiscal year.
- The government is “leveling the playing field” for small businesses by allowing those with an annual turnover of $5 million or less to get the same benefits as a mega-resort or large manufacturer. Bahamian small businesses and entrepreneurs will be able to apply for duty-free concessions on all items needed to start or expand their business, including on their first stock of inventory.
- The government has created a Special Economic Zone targeted at the southern islands of The Bahamas. These include Ragged Island, San Salvador, Rum Cay, Cat Island, Long Island, Mayaguana, Inagua, Crooked Island, Long Cay and Andros. With amendments to the Family Island Encouragement Act, these islands will benefit from duty and VAT concessions on a full range of materials to build and renovate a house, as well as start or expand a business.
- The government will invest over $100 million in hospital upgrades, $70 million of which will be earmarked for Princess Margaret Hospital and over $19 million for the construction of a new, four-story tower expansion at Rand Memorial Hospital, Freeport, Grand Bahama.
- The government will invest $31 million in renewable and resilient energy projects.
- Legislation will be amended to clarify that all vacation rental home marketplaces, like Airbnb and VRBO, will be required to pay VAT on rentals and commissions. The government is estimating $31 million in revenue from this move.
- The government is increasing the VAT on realty transactions over the $2 million threshold. Currently, all transactions over $100,000 are subject to 10 percent VAT. Any portion of the transaction now over $2 million will be charged at the full VAT rate of 12 percent.
- The government is eliminating VAT on baby and adult diapers, sanitary pads and tampons.
- The government is extending the tax concessions under the Special Economic Recovery Zone (SERZ) to the end of December 2021.
- A total of $7.5 million has been allocated to the digitization projects of the Ministry of Education to ensure all students have access to digital learning tools.