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Bahamian Government Update
During the 1990s the Bahamas enjoyed unprecedented prosperity under the Free National Movement party with Herbert Ingraham as prime minister, who replaced a government run by the Peoples Liberal Party and Prime Minister Pindling which had been in power for 22 consecutive years. While there is little question that part of this prosperity was a result of the peak of the greatest asset mania in the history of mankind, the Pindling government had become corrupted over the years even engaging in, or at least turning a blind eye to, the illegal drug trade.
In 2002 Bahamians voted the Peoples Liberal Party back into office. One of the early things the new government did was to raise fees for yachts entering the country, from $100 to $300 (for boats over 35' and to $150 for those under). The word then spread throughout the Caribbean (I heard it discussed in Tortola) and Florida and I suspect that the Bahamian borders will be much quiter during the next recession. The explosion in private watercraft in Florida seems to have compensated for it somewhat and I generally find customs to be very busy. The new government would have been better off with a well planned increase, and netted the additional revenue they had hoped for, if they had changed the entrance fee in a more widely recognized fashion. With the old and new fees a $20,000 vessel, for example, with a length of 35 feet and one person on board would pay the same as an $8,000,000 vessel of 100 feet with four persons on board. Yacht owners reasonably expect to pay by the foot for dockage etc., so it would not be a surprise if they had to pay by the foot to enter the Bahamas, with perhaps an additional surcharge for each passenger on board, perhaps in line with the current airport departure tax of $15 per person. Today, a young couple arriving in an open fishing boat, that would be entirely dependent on the Bahamas for dockage, lodging, meals and fuel, contributing broadly to the Bahamian economy, may not be able to afford the entrance fee. At the same time the completely independent mega-yacht owner brings his own lodging, can lay comfortably at anchor most anywhere he chooses, and can bring enough groceries and fuel for the duration of his stay, effectively being able to separate himself from the Bahamian economy. He will not view the increase to $300 as significant. If the government had made the new fees $3 per foot, for example, with a $15 per passenger fee, it would have been greeted without much protest by all categories of boater, and resulted in even more enhanced revenue as well as favoring greater numbers of smaller boat occupants participation in the Bahamian economy.
I have heard that increased fees are in part due to Americans going to the Bahamas and raping the waters of fish to import to the States for sale. I have first hand knowledge of a U.S. tuna fisherman doing this, with hundreds of pounds of tuna caught by a not very large private vessel. To preclude this the Bahamas could put a limit on fish poundage that can leave the country. For more onerous enforcement they could require vessels to go through customs as they exit the country. Almost all vessels exit near ports of entry currently so this would not impose too much of a hardship and would help protect the Bahamian fishery for everyone, both Bahamians and American sport fishermen. Alternately they could enforce the rule by stopping and boarding an occasional suspect boat as it leaves the Bahamas. Interestingly the new fees allow a boat to enter a second time within 6 months for free so this caters specifically to the commercial fisherman who can take advantage of this and makes his fees even cheaper than before if he is under 35'.
Perhaps government disappointment in the regressive result that this entry tax may eventually cause, especially in depressing the Bahamian businesses that cater to boat tourists, may increase desperation for the government and produce an equally unfortunate decision such as raising real estate property taxes on foreign owners. This would, of course, destabilize the current low risk perception held by foreigners toward Bahamian investment, and perhaps result in a collapse in foreign investment and subsequent implosion in property values and therein tax base, ultimately reducing revenue. Thus the economy would spiral into the kind of economy that the Bahamians suffered shortly after their independence, when they decided that they didn't need foreign investment and pursued similarly wrongheaded policy. Or consider the clear U.S. demonstration of the regressive nature of taxation via the so-called "luxury tax" that bankrupted so many boat builders and killed other industries as well.
I also fear that the damage that this entry tax could cause will take decades to reverse. I hope, for the sake of the Bahamian people, that I am wrong.