Almost $2B in GDP lost due to Baha Mar closure
Guardian Business Reporter
Published: Aug 16, 2016
The Bahamas lost almost $2 billion in gross domestic product (GDP) over the 18-month period following the closure of the stalled Baha Mar project, according to a report on the economic impact of the failure to open Baha Mar.
The report asserted that, if opened, Baha Mar would have added $1 billion of direct revenue annually, along with indirect and induced impacts. The calculation includes the value-added impact (GDP) for the project. The $3.5 billion megaresort was originally expected to be open in December 2014, and would have contributed to 12.8 percent of GDP over the next 20 years.
In an extended forecast, the report estimated that $35 billion would be lost in GDP contribution from 2015 to 2034 if the resort remains closed.
The report also showed that an estimated $315 million in tax revenue could have been earned if Baha Mar was open for business.
A breakdown of the $315 million estimate entails a loss of $25 million in stamp conveyance at a rate of 10 percent under the assumption that $250 million of real estate was sold within the 18 months of the resort opening.
For that same period, the government lost over $30 million in casino win taxes. The $30 million is a total of an estimated loss of $7 million for casino win taxes under $20 million and $25 million in win taxes for more than $20 million.
Other estimated sources of revenue lost included $16.3 million in annual business license (floor tax); $33.17 million in National Insurance; over $114 million in operations import duties, $13.28 million from departure tax and $81.5 million in occupancy taxes and value-added tax (VAT) on all non-gaming revenue.
The government also lost an additional $48 million in revenue for the 18-month period from the Bahamas Electricity Corporation (BEC) and the Water and Sewerage Company (WSC).
Income and Unemployment
The report notes a loss of $451.31 million in salaries and wages for 9,074 employees earning an average of $33,000 annually or $687.50 per week.
To be clear, the income and unemployment estimate is based on the 18-month period.
The unemployment rate stood at 14.8 percent in November 2015.
Baha Mar laid off more than 2,000 workers in October 2015, but still employed a skeleton staff, which decreased over time.
The report noted that the 9,074 jobs lost assume 3,000 direct jobs with ramp-up post-openings and other indirect and induced jobs.