An Alternative Tax Regime for the Bahamas
GroundSwell, May-June 2005]
Editor's note: John Fisher is the chairman of the
Ontario/Quebec chapter of Common Ground-USA. He winters on Andros
Island, Bahamas. In January 2005, the following was sent to 26
Bahamian politicians, media people and concerned citizens. The cover
letter quoted from the April 15, 1977 Miami Herald, "Bahamas
Land Tax": "Bahamian real estate, like that in the
Caribbean and other resort areas, appreciated rapidly during the
1960's fueled largely by speculative land buying in the outer
islands." Prime Minister Lynden Pindling had the foresight to
state, "When we have put in the improvements in all these
islands then some fellow who bought a lot for $3,000 comes back,
sells it for $10,000." Past Bahamian governments have
recognized that social demands create value to a nation's limited
natural resources, which should be recovered for community purposes.
Will Bahamian decision makers see the justice and the sustainable
growth potential in shifting the revenue source for government from
labour and business to the natural resource base?) Included in the
packet was the list of 14 Green Economics Principles by Frank de
Jong, leader of the Green Party of Ontario.
An Alternative Tax Regime for the Bahamas
The media has been reporting that the Bahamas is looking for an
alternative tax regime. As an eight year frequent visitor to Central
Andros (Island) and with a teaching background in economics and
geography, I would suggest the Government avoid taxing the efforts
and wealth of the private sector and instead collect the resource
rents that are created by the presence and activity of the community
as a whole.
Taxes on production (manufacturing, services, trade) are a
penalty for "doing business." The recent duty exemption
for building materials in the Family Islands is an admission that
such taxes (income and sales taxes, VAT, property taxes on
improvements) discourage production incentives, hurt the most
unfortunate in society and encourage an underground economy.
Bahamian location values are generated because these islands are
on favourable trade routes for commercial and tourism traffic (air
and sea). Internally, certain prime resources such as the Andros
Fresh water lens and Nassau harbour have a potential unlimited
demand from inside and outside the country. Other resources that
have untapped or undertapped revenue potential are urban land,
especially on New Providence, the reefs, pine forests, beaches and
What are these worth to Bahamians? Are Bahamians getting good
value for these in terms of resource rents for their use? Is the
government using these resource rents to the best advantage?
A particular problem for the Bahamas, is the confusing and
wasteful use of "generation lands." Like all land, these
should be assessed at market value and taxed accordingly. Families
would be encouraged to deal with boundaries, property rights within
the family or just pay their fair share (i.e., for roads, etc.) to
the larger community as a family.
In other words, social actions and decisions like giving
extraction permits or zoning etc. give natural resources a value far
beyond their use in the normal production process. These socially
generated values, which now go mostly into private pockets, should
be returned to the society that created them, as for example a
Social Dividend (Alaska) or Heritage Fund (Alberta).
There could be a gradual "tax shift" off duties,
buildings, and business to resource rents. This would avoid a sudden
shock to the economy.
There would be an average household use exemption (i.e., for
water, conch, fish, etc.) And above that the user would pay to use
the common wealth of the commonwealth.
Another positive feature of collecting resource rents is the
environmental impact. Putting a price on a nation's ecosystems would
encourage users, especially the corporate user, to give more
consideration to conservation practices.
The Ontario Green Party Leader, Frank de Jong, has developed a
list of 14 Green Economic Principles. Clearly this type of tax
regime removes most disincentives to labour and business while
encouraging wise use of a nation's natural resources. Hopefully the
decision makers in the new tax regime process will consider the
natural resources revenue source as a viable alternative.