The third luncheon meeting of Abaco businessmen to discuss the implications of the Free Trade Area of the Americas on the Bahamian economy was held at Bay View Restaurant, Dundas Town, on 8th July. The main speaker was His Excellency A Leonard Archer, Bahamas Ambassador to Caricom. That long title only lasted as far as the official introduction by Patrick J Bethel. Thereafter His Excellency became Len, as befits an Abaco son of the soil. Mr Bethel noted that Len had considerable careers in education and trade unionism before entering the diplomatic service.
The main purpose of the meeting was to present the Bahamas Government side of the FTAA, following meetings that had featured the private sector and the Organisation of American States. Ambassador Archer pointed out that the Bahamian position was yet to be negotiated. He read verbatim the Prime Minister’s comments on the FTAA from the Budget Debate, which included the need for the FTAA partnership to be on an equitable basis and that smaller economies should not be held to the same economic strictures as the major economies such as the US, Canada, Mexico and Brazil. Except for import tariffs, The Bahamas needed very little in the way of protective measures. It was obvious that there would have to be extensive restructuring of the present tariffs.
It was important, His Excellency noted, that the 34 countries involved not impose local licensing restrictions, tariffs and product standards that would favour their own markets and restrict the flow of goods. Any protective measure by one country would lead to reciprocal responses by the other FTAA countries.
It was clear, he said, that the Government was not considering income tax as a solution. At the moment, the tax base of The Bahamas is being shared by many visitors and temporary residents. Income tax would put the onus on Bahamians alone. Among the options open to the Government were Value Added Tax and Sales Tax. VAT involves the taxing of improvements made in a product from its raw state to its final selling state. Ambassador Archer noted that he once ordered a rum and juice in a VAT country and the tax was applied when the bartender made the mix. “It’s a very confusing form of taxation,” he admitted.
In a round table discussion that followed the main address, there was speculation on what percent Sales Tax would compensate for the loss of revenue from import tariffs. 15% seemed to be the consensus, bearing in mind that the millions of dollars spent in Florida by Bahamians would automatically be relocated on products that were available in The Bahamas.
It was acknowledged that a 15% (or whatever) sales tax was only realistic if was applied fairly and completely, with good policing of the system. If the Government were able to ensure that everybody was abiding by the tax, there would be a general reduction in the cost of living and an impetus towards a more active economy – and greater entrepreneurial and business opportunities. For the first time in this series of meetings there was a sense of better things to come and new possibilities to be addressed.
Concerns about immigration were dispelled by Leonard Archer. There were similar agreements being worked out, he said, that allowed owners and key personnel of businesses to operate overseas businesses. The main work force, however, would remain indigenous. No substantive issues would be decided until the next round of FTAA talks in September and all agreements would have to comply with the FTO.
“Bahamians are not the only ones worried about the pace of the FTAA,” Mr Archer noted. He showed a headline from the July issue of Latin Trade magazine that read: “Plenty of Talk – No Action”.
Thank you, Len, for a most cogent address, one that opened up the possibilities of the impending agreements rather than merely raising or allaying fears.
