This was according to former Prime Minister and North Abaco Member of Parliament Hubert Ingraham.
He was contributing to debate on a resolution to enact the agreement. Members of the House passed that resolution Tuesday evening before adjourning to January 21.
Mr. Ingraham said the agreement, which his administration “wrestled” with for some time, is imperative to the continued viability of the financial services sector.
“It was not a position that was easily arrived at by the Free National Movement government…the decision to not sign the TIEA with the U.S. before January 2002 was a considered and conscious decision taken by two consecutive governments, the Free National Movement and the former Progressive Liberal Party government between 1983 and 2001,” Mr. Ingraham said.
He pointed out that the idea of a TIEA came into being back in 1983 when the U.S government introduced it as a prerequisite for Caribbean basin states which wished to access the convention tax deduction benefit for U.S-based businesses holding conventions and conferences in the Caribbean under the Caribbean Basin Recovery Initiative (CBI).
He noted that nearly all Caribbean countries, excluding the Bahamas, signed the CBI and got convention tax benefits from the United States.
“The one country that could benefit most from it that had the hotel and convention facilities, was The Bahamas,” Mr. Ingraham said. “But we didn’t sign.
“Notwithstanding the attractiveness of convention tax deduction benefits and the stimulus for the expansion of convention tourism, governments of The Bahamas up to 2002 believed that a Tax Information Exchange Agreement was too high a price to pay given the likely fallout for the Bahamian financial services sector – a sector which was largely self regulatory and operated under terms of strict bank secrecy enshrined in our laws since 1965.”
He also charged that the government “botched” a recent amendment to the Financial Transactions Reporting Act by allowing regulators, including the Central Bank and the Compliance Commission, to use their discretion in determining what to do with accounts that do not meet full Know Your Customer requirements by the end of March, 2004.
House Members recently passed the amendment which gives financial institutions an extra three months to verify the identities of persons who have accounts with them.
“It would have been simpler, as we on this side recommended, to have financial institutions discontinue any further activity of those accounts until further KYC requirements are met, which is exactly the amendment the government brought the first time in this matter but then had a change of heart,” Mr. Ingraham said. “Certainly, in our view this ought to have been the case in respect of foreign currency accounts.”
Mr. Ingraham said instead, the government has introduced what the Free National Movement considers to be a convoluted system.
“[It requires] lists of unverified accounts to be forwarded to the supervisory authority and then as I understood the minister, the government thereafter, develops guidelines to direct financial institutions on actions to take after March 31st. We were particularly concerned with respect to foreign currency accounts and verified identities,” he said.
“We remain unconvinced that this system will protect our jurisdiction adequately from renewed accusations of weak control of still unverified accounts, most especially foreign accounts with substantial balances,” Mr. Ingraham added.
The former prime minister also said he disagreed with the date for verification of the identity of accounts being pushed to March 31, 2004 when the original deadline put in place by his government was December 31, 2003.
According to Mr. Ingraham, most of the problems with the amendments to the Financial Transactions Reporting Act have to do with the government’s inability to act decisively on any matter regardless to its importance.
Borrowing the words of former Jamaican Senator, Trevor Munroe, when he lamented the slow progress of a certain piece of legislation, Mr. Ingraham said, ‘with the greatest of respect to participatory democracy of which I am and remain an apologetic advocate, we should not confuse participatory democracy with gross indecision, indecisiveness and failure to implement.”
Regarding the consultative process to amendments to the financial services legislative, Mr. Ingraham said in some respect it may be considered “procrastination and indecision.”
Mr. Ingraham noted that the government had 18 months in office to decide whether it wanted to be bound by the Tax Information Exchange Agreement with the United States.
He recalled that when parliament passed financial regulations to bring The Bahamas into compliance with international best practices to have the country removed from the Financial Action Task Force blacklist, the PLP chided the FNM government, accusing it of rushing legislation through parliament.
Mr. Ingraham said, “If six months was a rush, then what might we call seven days to a deadline?”
“What was it that took the government 18 months to come here with this?” he questioned. “Do we call it procrastination, indecision, stalling? Was it that the government had difficulty deciding in a timely matter whether it wished to continue with the agreement which contains an agreement for withdrawal with three months notice? What do we call it? Incompetence, ineptitude and a reckless disregard for timeliness?”
On Tuesday, The Bahamas was just over a week away from the January 1 deadline for the implementation of the tax information treaty. Mr. Ingraham said meeting the deadline is imperative if the country is to keep its Qualified Jurisdiction Status.
By Hadassah Hall, The Bahama Journal
