Laing: Budget Prepares For The Future
By Kendea Jones:
More than a month after the Ingraham administration presented its 2010/2011 Budget, State Minister for Finance Zhivargo Laing is still fighting off a firestorm of criticisms, claiming that the government made the best move for the country. The new fiscal plan, which takes effect on Thursday, has a rash of cuts and tax increases.
For instance, come July 1, the government will introduce a 65 per cent rate for cars that are 2,000 ccs or fewer, a 75 per cent rate for cars between 2,000 and 2,500 and an 85 per cent rate for all other cars, except hybrids, which face the lower duty of 25 per cent.
According to Prime Minister Hubert Ingraham, this allows many fuel-efficient, four-cylinder vehicles to be covered under a rate of duty that is mid-way between the low and high rates.
"I think there were some adjustments made for the timing of when the cars will come in and some provisions made for persons who would have imported vehicles between the 26th June and July 1 when those rates take effect," Minister Laing explained.
"Commercial credits will be granted to auto dealers and a refund to individuals who would have imported vehicles during that period."
But according to the state minister, not only did the government present a budget that would sustain the country for the next 12 months but beyond that timeframe.
"The reality is that we presented the budget we did so that we could put ourselves in a position where we could cope with a crisis if it occurs," he said.
"We didn’t want to grow the debt in the midst of the crisis. So, we are looking to claw back some of the damage and put ourselves in the position that if a hurricane damages The Bahamas, we would be able to respond. If there is a crisis we would be able to do what is necessary to respond to it."
Minister Laing also again dispelled the notion that the government is broke as "ludicrous."
"The government couldn’t pay salaries if it did not have money. This is a question of putting the fiscal house in the position that you are able to operate in a sustainable manner; meaning that you are not doing something that is going to cause you to be unable to maneuver," he said.
"We are not doing something that is going to cause such a heavy load on future generations. The government is not going to spend widely today, as if there is no tomorrow. Anything can happen tomorrow."
The 2010/2011 Budget allocates some $1.55 billion for recurrent expenditure and more than $265 million for capital expenditure.
Government debt at the end of June 2011 is projected to stand at 49.2 percent of GDP, up from 47.3 percent a year earlier.
June 30th, 2010
jonesbahamas
A political blog about Bahamian politics in The Bahamas, Bahamian Politicans - and the entire Bahamas political lot. Bahamian Blogger Dennis Dames keeps you updated on the political news and views throughout the islands of The Bahamas without fear or favor. Bahamian Politicians and the Bahamian Political Arena: Updates one Post at a time on Bahamas Politics and Bahamas Politicans; and their local, regional and international policies and perspectives.
Showing posts with label Bahamas' 2010/2011 Budget. Show all posts
Showing posts with label Bahamas' 2010/2011 Budget. Show all posts
Thursday, July 1, 2010
Friday, June 11, 2010
Zhivargo Laing: The Bahamas' best interest is worth the Free National Movement's (FNM's) political life
Laing: Nation's best interest worth FNM's political life
By KRYSTEL ROLLE ~ Guardian Staff Reporter ~ krystel@nasguard.com:
The austerity measures the government is proposing in the 2010/2011 budget were borne out of absolute necessity, Minister of State for Finance Zhivargo Laing said yesterday while contributing to debate on the new spending plan in the House of Assembly.
Over the past year and a half, the government has borrowed and spent millions of dollars to fund various initiatives in response to the economic downturn.
As a result, the national debt is nearing $4 billion.
But Laing said now that the economy is modestly rebounding, it is time for the government to try to right the country's finances.
He acknowledged that the measures that the government is taking could lead to some political fallout. Nonetheless, he said it is something that had to be done.
"To do the necessary is sometimes unpleasant, but always correct and always rewarding," he said.
"If sometimes you have to spell your political death, then march toward it. The truth is that this nation's best interest is worth our political life. We labored over many months, many hours to produce this budget. It is a challenging budget."
However, he added that it is "loaded with adequate provisions for every government ministry while all around the world civil servants are losing their jobs. We made provisions for every single civil servant to stay and they have seen not cuts in their salaries."
The government is seeking to increase the stamp tax on realty transaction, stamp tax on banks, hotel room tax, air and sea departure tax, vehicle tax, and the beer tax.
Additionally, all parliamentarians, including Prime Minister Hubert Ingraham, will take a pay cut.
Other cost-saving measures are proposed, including a stall on increments for public officers. Public service promotions are being frozen, except in special cases and public service employment is being frozen, except in extenuating circumstances, such as essential services.
Laing said there is no other way to enhance revenue but to increase taxes.
"The point is we should have a debate one day about this fundamental adjustment that we need to make to our circumstances, but over the next 12 months, we have to get revenue. We have to produce the revenue in a way that does not injure the people of the Bahamas," he said.
Laing said the country must begin to reduce the deficit and eventually begin lowering its debt to GDP.
Ingraham recently said the government debt at the end of June 2011 is projected to stand at 49.2 percent of GDP, up from 47.3 percent a year earlier.
Laing said the budget has long term implications that bode well for the country's future sustainability.
"For the next 12 months we have to attend to the business of the Commonwealth of The Bahamas. All of us are being called upon to act in a way to best assist the Commonwealth of The Bahamas to be better off financially," he added.
Laing noted that in some other countries public servants are being sent home.
He added that the majority of the taxes are levied at international sources and banks and not at the average Bahamian.
Laing also said the government is focused on its mission and vision for the country to have a dynamic and growing middle class, a level of saving for retirement, high levels of success for entrepreneurs and a modest level of taxation.
"That remains our vision and mission," he said.
"Our effort in this 2010/11 budget is geared towards putting us in a better position to fulfill that vision and mission."
June 10, 2010
thenassauguardian
By KRYSTEL ROLLE ~ Guardian Staff Reporter ~ krystel@nasguard.com:
The austerity measures the government is proposing in the 2010/2011 budget were borne out of absolute necessity, Minister of State for Finance Zhivargo Laing said yesterday while contributing to debate on the new spending plan in the House of Assembly.
Over the past year and a half, the government has borrowed and spent millions of dollars to fund various initiatives in response to the economic downturn.
As a result, the national debt is nearing $4 billion.
But Laing said now that the economy is modestly rebounding, it is time for the government to try to right the country's finances.
He acknowledged that the measures that the government is taking could lead to some political fallout. Nonetheless, he said it is something that had to be done.
"To do the necessary is sometimes unpleasant, but always correct and always rewarding," he said.
"If sometimes you have to spell your political death, then march toward it. The truth is that this nation's best interest is worth our political life. We labored over many months, many hours to produce this budget. It is a challenging budget."
However, he added that it is "loaded with adequate provisions for every government ministry while all around the world civil servants are losing their jobs. We made provisions for every single civil servant to stay and they have seen not cuts in their salaries."
The government is seeking to increase the stamp tax on realty transaction, stamp tax on banks, hotel room tax, air and sea departure tax, vehicle tax, and the beer tax.
Additionally, all parliamentarians, including Prime Minister Hubert Ingraham, will take a pay cut.
Other cost-saving measures are proposed, including a stall on increments for public officers. Public service promotions are being frozen, except in special cases and public service employment is being frozen, except in extenuating circumstances, such as essential services.
Laing said there is no other way to enhance revenue but to increase taxes.
"The point is we should have a debate one day about this fundamental adjustment that we need to make to our circumstances, but over the next 12 months, we have to get revenue. We have to produce the revenue in a way that does not injure the people of the Bahamas," he said.
Laing said the country must begin to reduce the deficit and eventually begin lowering its debt to GDP.
Ingraham recently said the government debt at the end of June 2011 is projected to stand at 49.2 percent of GDP, up from 47.3 percent a year earlier.
Laing said the budget has long term implications that bode well for the country's future sustainability.
"For the next 12 months we have to attend to the business of the Commonwealth of The Bahamas. All of us are being called upon to act in a way to best assist the Commonwealth of The Bahamas to be better off financially," he added.
Laing noted that in some other countries public servants are being sent home.
He added that the majority of the taxes are levied at international sources and banks and not at the average Bahamian.
Laing also said the government is focused on its mission and vision for the country to have a dynamic and growing middle class, a level of saving for retirement, high levels of success for entrepreneurs and a modest level of taxation.
"That remains our vision and mission," he said.
"Our effort in this 2010/11 budget is geared towards putting us in a better position to fulfill that vision and mission."
June 10, 2010
thenassauguardian
Thursday, June 10, 2010
Bahamas 2010/2011 Budget Under Fire
Budget Backlash
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
Subscribe to:
Posts (Atom)