The Bahamas Government Responds to U.S. President, Donald Trump 10% Reciprocal Tariff

U.S. President, Donald Trump 10% Reciprocal Tariff on Caribbean Countries - including The Bahamas

The Government of The Bahamas has taken note of the announcement by U.S. President Donald Trump to impose a 10% reciprocal tariff on several Caribbean countries, including The Bahamas, that export duty-free to the United States under the Caribbean Basin Initiative (CBI).  It is important to note that The Bahamas currently maintains a trade deficit with the United States.

We will engage with our U.S. counterparts and work collectively with our CARICOM partners in response to this development.  The Government has approved a National Trade Policy aimed at diversifying trade.

As part of our broader strategy to protect the Bahamian economy, we have already announced a number of measures, including the development of a trade diversification framework.  We remain focused on minimizing the impact of global trade decisions on Bahamian businesses and consumers.

Source

The Bahamas Prime Minister on a New Energy Era for The Bahamas

Transforming our country’s energy sector has been a priority for us from the start, says Bahamian Prime Minister, The Hon. Philip Brave Davis, KC., MP.,

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On the one hand, we have been compelled by the urgency of change – the need to relieve Bahamian families and businesses from the burden of high prices and unreliable electricity supply.

Relief is an important-enough goal – especially during a global inflation crisis.

But we are also motivated by our profound conviction that our economy can be more competitive, more prosperous, more dynamic, and more inclusive — with more paths to security and success for more Bahamians.

We have very big ambitions for our country and for the Bahamian people.

However – you can’t build a 21st century economy with 20thcentury infrastructure.

In every conversation I have with entrepreneurs, business owners, and investors – from the very smallest to the very largest – the high cost of electricity, and the costs and uncertainties associated with unreliable supply, inevitably come up.

For most Bahamians, the only bill bigger is their rent or mortgage payment.  Major bills are a major burden – which means less disposable income, which means less spending and investment in our local economy.

And, of course, high bills for businesses means high operating costs, affecting our competitiveness and our ability to diversify, and creating obstacles to growth and development – impacting investments, business expansions, and job creation.

Now – even with all of those problems, we’re a special-enough country that we’ve come roaring back after the dark days of, Hurricane Dorian, pandemic curfews and lockdowns, breaking big records, with substantial new investments and job growth.

Just imagine what we could accomplish if we had affordable, reliable, clean energy!

That’s where we’re finally headed.

But right before we get to the hopeful part of today’s launch – the solutions! – I want to make sure you all have an understanding of the scale of the challenge.

Important parts of our electricity infrastructure, including some transformers and substations, are more than 50 years old – they date back to before independence!

It’s hard to describe the experience of listening to engineers emphasize that critical parts of our grid are on the verge of collapse – with no chance of revival, once they go down.

And then there are the generation engines – 60% of BPL’s plant in New Providence, and 80% in the Family Islands, need replacement within the next five years.

So we have an aging, vulnerable, deteriorating, expensive system, dependent on heavy and diesel fuels, that cannot meet current needs – let alone the growing energy needs of a digital economy, or the increased demand we have to anticipate as temperatures rise in this new climate era.

If you’re wondering how much it costs to rescue and modernize our grid – I have an answer for you: about half a billion dollars.

Of course, BPL is carrying a legacy debt of the same amount —  more than $500 million, not to mention an unfunded pension liability of $100 million.

I could go on – about the grid’s vulnerability to storm damage, the inability of our current system to integrate renewable energy, the tens of millions in rental costs annually which contribute to high prices – but I can see you’re ready to move from problems to solutions.

As were we.  We understood that as urgent as change was, the quick short-term fixes that have been the historical pattern have not served our country well.

We knew we needed comprehensive, innovative reform.

Today, we’re excited to share these policies with you, which include:

- A foundational update to transmission and distribution in New Providence, so we can have a more stronger, more resilient, more modern, more efficient power grid – critical to gaining both lower prices and increased reliability;

- For the first time, utility-scale solar power in New Providence – 70 MW of solar power, and 35 MW of Battery Energy Storage Systems will be integrated into the grid;

- Solar power throughout our Family Islands – where new hybrid microgrids will incorporate solar power and natural gas, allowing us to eliminate expensive BPL rentals, replace aging generation units, and establish battery storage systems;

- Natural gas as a partner fuel to solar, to create important savings that can be passed on to the consumer;

- Energy Efficiency Upgrades, including energy audits and efficiency upgrades for government buildings, educational outreach to consumers, LED street lighting, and rooftop solar at schools; and:

- New electricity legislation (Electricity Act 2024), which allows for stronger consumer protections, and – very importantly, as you’ll hear momentarily – allows adjustment to the tariff rates to support consumers who most urgently need relief from high prices.

I’d like to pause here to say that when I asked Minister Coleby-Davis last September to become the country’s Minister of Energy, we discussed our shared priorities for energy reform, which included:

- Immediate relief for Bahamian families

- Reforms that lead to lower prices, and fair prices, over the medium and long term

- Increased reliability

- Increased grid resilience during storms

- Cleaner energy, with a lower carbon footprint…

- An ironclad commitment to union workers, including job and pension security

- New entrepreneurial, employment, and investment opportunities for Bahamians…and:

- Strengthening the financial position of BPL, to ensure legacy debts are addressed.

To the Minister’s credit, she jumped right in and never looked back.

Which is why this morning, she has the honour of sharing more of the details of these big new policies.

And as I turn things over to her, I will close by reminding everyone – we didn’t come here to defend the status quo, we came here to change it.

We are determined to close the gap between our national potential and our national reality – and with this very big and ambitious agenda of reform and investment, we believe we are well on the way to ensuring that a new energy era will lead also to a new economic era – a new era of opportunity for all.

Source

Energy Minister JoBeth Coleby-Davis on a new energy era in The Bahamas>>>

Value Added Tax (VAT) and the Bahamian economy

Imf Not Forcing Vat On Bahamas

Tribune242:



The Bahamas’ decision to implement Value-Added Tax (VAT) did not result from the International Monetary Fund (IMF) holding a gun to the Government’s head, a key Ministry of Finance consultant says.

 

Ishmael Lightbourne, former senior partner at PricewaterhouseCoopers (PwC) Bahmas, told dozens gathered at Evangelistic Temple that VAT is just one of many remedies to get the Bahamian economy back on track, given that the national debt has skyrocketed over the past 20 years.

 

The former World Bank director said the Bahamas’ fiscal deficit is five times greater than what it was in 1993. What started out as borrowing to finance capital spending on infrastructure – roads, hospitals and utility plants – has evolved into borrowing for everything from operating public corporations to paying civil service salaries.

 

“If the IMF were in the position to force us to do anything, they would have done so 20 years ago,” Mr Lightbourne said. “There is a great deal of misunderstanding about that. The IMF has made no threats, and does not - and cannot - seek to impose their will on a sovereign government.”

 

He said VAT is the Government’s effort to balance out the unsustainable inequity between what the country brings in as revenue and what it spends.

 

“Governments,” Mr Lightbourne said, “have for the past two decades tried to fill the vacuum left by policies that once allowed foreign investors and developers to build without putting in their own capital investment in roads, utilities, parks and more.

 

“Succeeding governments were left to foot the bill, but expenses were greater than revenue under an increasingly outdated tax system of heavy reliance on Customs duties.”

 

“For the past 20 years, in the absence of major private sector investment, this is what we have done,” he added. “As a result, our debt has more than doubled and growth has been stagnant. So today we can no longer be inactive.”

 

The Government’s series of consultations on VAT continue this month at Government High School on February 19 at 11am; AF Adderley High School on February 19 at 9:30 am; SC McPherson High School on February 20 at 10am; the Bahamas Human Resources Association on February 20 at 11:40 am; Alexiou Knowles & Co. on February 21 at 8:30 am; and BEC on February 21 at 11:30 am.

 

For more information on the VAT implementation, call the Ministry of Finance VAT hotline between 9am and 5pm, Monday-Friday, at 225-7280. Persons can also visit the official Facebook

page at www.facebook.com/vatbah242.

 

February 18, 2014

 

Tribune 242

Tamara Van Breugel on Value Added Tax (VAT) in The Bahamas

Citizens Must Unite To Be Heard In The Vat Debate

MY NAME is Tamara van Breugel and I am a citizen of the Commonwealth of the Bahamas.  I am a young working mother, my family owns a small business in the city, and I strongly believe there are responsible alternatives to VAT.

First of all let me say that I am by no means an expert on economic theory or taxation, I am not a representative of any political persuasion, and I have no special interest ties other than a special interest in the growth and prosperity of The Bahamas and of every Bahamian man, woman and child.

The Nassau Institute has kindly granted me a few moments in tonight’s programme to share with you my personal thoughts on VAT, and I am extremely grateful for their kindness.

Over the months since the announcement of the imposition of VAT I like many of you here tonight have been following the news media, scouring the internet and attending various speaking forums to better understand this new tax proposal.

In my research I have learned a few important things:

Our nation, has over many decades and successive administrations become excessively burdened by debt.  Our national debt is projected to exceed the $5 billion mark by the end of this fiscal year.  This is the equivalent of 61.5 per cent of our gross domestic product and nearing a danger zone of 70 per cent debt to GDP ratio.

Governments have not been effective in collecting existing taxes or in safeguarding public funds from waste and mismanagement.

The 2010 / 2011 auditor general report illustrates some of these collection gaps, identifying:

• 5,980 cargo manifests that had not been presented to Bahamas Customs for clearance

• $95 million in real property taxes went uncollected taking the total sum outstanding to $541.886 million

• $302,866 of unpaid fuel from the Ministry of Works

In the 2014 /2015 fiscal budget subsidies have been allocated as follows:

• $20 million to subsidise Bahamasair

• $20 million in subsidise to Water and Sewerage

• $7 million to the Bahamas Broadcasting Corporation

... Ok, you get the point.

The Bahamas is preparing for ascension to the Wold Trade Organisation by the end of 2014.  As a part of this process The Bahamas must commit to dramatically reducing import tariffs.  The expectation could be for an average peak tariff of approximately 15 per cent.  Down from the current average of 55 per cent.

To avoid the potential ill effects of a credit risk rating downgrade the government has determined that a Value Added Tax mechanism would be the best option to help our nation combat the double-edged sword of a swelling deficit and the need to reduce the revenue from tariffs.

And on top of that the government believes a swift implementation is required to steer us off the path of economic failure.  The increased revenue goal with the implementation of Value Added Tax is $200 million.

And so this in a nutshell defines the events that lead to us all being in this room tonight.

Early on when the idea of VAT was being mentioned I did not know much about it but I did recognise that for better or worse, this tax was destined to be the most significant adaptation our modern economy has ever seen.  I also started asking myself some basic questions like, what is this tax?  How does it work?  How will it work for us?

Like most, I waited and waited for the government to provide full details and education on how this tax plan would work.  But as the information was slow to come I started to reach out on my own to learn more.

Here is what I have found.

Firstly, VAT is a regressive form of taxation.

Burden

This means that the economic burden will be greater on households with lower incomes.  And while our customs duty system was also regressive, the VAT system does not seem to rectify this imbalance. As an offset to the regressive nature of this tax our government has provided for some VAT exemptions including breadbasket items, medical services and educational services.  Offering comfort to the most needy in our society through this bare-bones survival kit of exemptions implies to me that VAT planners do anticipate a raising tide of prices that would overwhelm our poorest citizens.

And then from there I start to wonder... when these struggling lower income households become burdened with higher prices on their non-exempt consumption what will they do to get by?  Take a second or third job?  Forego access to modern amenities like electricity, running water and telecommunications?  Lean more heavily on the social services network?  Or perhaps fall prey to the lure of white collar and blue collar crime?

Next, VAT will increase our cost of living.

Though the exact amount of this increase seems to become more and more difficult to define as we get closer to implementation, the estimates I have heard range from 3 per cent – 30 per cent and according to a Ministry of Finance official: “On the cost of living there will be some initial impact from the VAT but that initial impact will disappear in a very short time-frame, over six, eight years. That is not long,”

Can we as citizens really afford a cost of living increase now?  And could we endure it for six to eight years?

According to statistics released by the Central Bank of The Bahamas, 95 per cent of Bahamian dollar personal savings accounts have a balance of less than $10,000 and the average balance is $704.  Additionally a Ministry of Finance official recently disclosed that around 70 per cent of government payroll is dedicated to salary deductions which service consumer loans.

By the looks of it the People of the Bahamas may be just as cash strapped as the government of The Bahamas.

On a personal level, as I sift through my household bills I am always left to wonder will there be enough money to get through the month?  And the thought of any increase makes me scratch my head and wonder … where do they think this money is going to come from?  Will it come from a decision to cut back on my child’s education?  Will it come from a decision to shop only in the breadbasket aisles at the supermarket?  Or will I have to start making some even tougher decisions?

Additionally, VAT will increase the cost of doing business.

If you own a business that is just getting by today how will you handle it when your prices increase and your customer volume goes down?  Will you make the shift to lower quality products and services?  Will you make some tough decisions about which staff to let go?  Or will you start preparing your business exit strategy?

The other thing about doing business is that VAT will require businesses to divert a portion of their time and resources from usual business activities to take on the new and uncompensated role of tax collector.

Most VAT registrants will be required to install new systems and acquire the services of a professional accountant to implement and administer the tax.   Additionally the filings will be required on a monthly basis and amounts will be payable at the time the invoice is issued and not when payment is received.   How will businesses manage this new expense?  Do you think they will absorb it into their profits?  Or will they build it into the price? And beyond that, might some businesses even try to evade paying these taxes altogether?

These are just some of my findings from my research on VAT.  It seems however, that the only sure thing that comes out of each new discovery is even more questions. Regardless of where you live, how much you earn or who you voted for don’t you also have some questions?

I will admit I did learn one other thing through this process.  And that is that the people of Turks and Caicos were able to successfully convince their government to stall their VAT plans and implement alternative measures to get a handle on their economy.

Success

From what I can tell a few factors combined to make their effort a success.  Firstly they are a UK overseas territory, which obviously does not apply to us.  But what I also found out was that when ALL the people came together and spoke in a unified voice they were able to demand that their decision makers move toward alternative revenue generating and debt reducing strategies.

Based on this insight I believe that the VAT debate in The Bahamas has the potential to engage and unite our country like no other issue of our time.

In the Bahamian context, I believe that the road-map towards alternative economic strategies could include:

• Enactment of the Freedom of Information Act so that we can understand how our tax dollars are being managed.

• Full enforcement and collection of outstanding taxes

• Implementation of further reductions in government expenditure

• Develop near-term plans to relinquish under-utilised or unprofitable government assets and corporations

• Legislate strict conditions and limits under which future government debt could be approved

And if following these initiatives, additional tax revenue is still deemed necessary, I believe that a comprehensive economic impact assessment should be conducted to determine the appropriate economic and tax reform strategies our nation should implement.

Fellow citizens, in a time when we are being asked to forego some aspect of our quality of life to sustain our government through this fiscal crisis I believe that it is every citizen’s obligation to ask serious questions about how the financial affairs of their country are being managed and I also believe it is a citizen’s right to receive full and serious answers from its government.

Additionally, I believe it is only through the unity of people power that we can move this conversation with our government forward.

I know that there are many concerned groups forming and strategising on this issue as we speak. These groups will vary in their objectives, their access to professional advice, and financial resources.

However, what if we consider for a moment that the most powerful and important participant in this discourse could be THE PEOPLE?

At the moment, the people are in general disconnected, distracted by the daily grind and without adequate information on legislation that will impact their lives.

Right now the people need several things to be effective – they need to be focused, they need to be educated about VAT in plain language and they need to be given a forum to express their opinions to their decision makers.

To assist in this process of engaging the people on this issue, a group of young Bahamians called Citizens for a Better Bahamas aims to launch a broad based educational campaign on VAT throughout our community streets, through social media and on our webpage: www.citizensforabetterbahamas.org.

Our core campaign objective is to launch a petition both on-line and on the street specific to each constituency and addressed directly to each member of parliament.  The petition will request each representative to vote NO to a VAT implementation of July 1 and to consider responsible alternatives.

We understand that this is a tall order on a tight time-line but we believe it is through activities like these that we will be able to help our decision makers know that we are all here, we are all aware and we wish to be heard.

You are here tonight because you are aware and you want to know more. But is your neighbour aware? Or your co-workers? Or your extended family?  It will only be through a re-connection of our entire community that we will have our voices heard.

Citizens for a Better Bahamas is poised to become that re-connection point for our nation. But we recognise that on this issue there is a need to move quickly and we recognise that we cannot do it alone.  We need YOU, EACH AND EVERY ONE OF YOU, we need your time, we need your talent, and yes we need your financial support.

We each have a vested interest in the outcome of the VAT debate.  If we put aside our differences of background and social status and denomination and political affiliation and bind together as Citizens of the Commonwealth of the Bahamas I believe our voice will be heard and acknowledged by our decision makers.

It was Margaret Meade who once told us “Never believe that a few caring people can’t change the world.  For, indeed, that’s all who ever have.”

Fellow citizens, if you believe in this simple idea I ask that you join us.  Together we are better and together we can build a Better Bahamas.

November 17, 2013

What do you think? Send your comments to pnunez@tribunemedia.net or join the conversation on tribune242

Opinions on the grim prediction of the state of the Bahamian economy ...after the value added tax (VAT) is implemented

VAT Panic Increases

By Kendea Smith
The Bahama Journal



A prominent businessman and a well-known economist have differing opinions on the Nassau Institute’s grim prediction of the state of the economy after the value added tax is implemented next year.

According to the institute’s 48-page paper titled “The economic consequences of value added tax” David Godsell, a third year PHD student of Queen’s University School of Business, who authored the paper, says labourers can expect a decline in real wages which will in turn lead to a decline in the labour supply.

He adds that the government would stand to lose $165 million in revenue and the private sector would suffer $103 million in losses.

“Businesses and employers with VAT-based sales can expect reduced demand for goods and services, which will in turn reduce their demand for labour. Under extraordinarily conservative estimates biasing towards heightened government revenues, we forecast VAT adoption will lead to a $165 million decline in government revenues,” he said.

“Simultaneously, we estimate VAT adoption will burden the private sector with $103 million in annually recurring compliance costs and an average of $4,300 in compliance start-up costs for each VAT registrant.”

The report concludes by pointing to failed VAT adoptions in countries similar to The Bahamas and by highlighting contemporary efforts to reduce budget deficits through reductions in government spending.

Upon hearing the news, former Chamber of Commerce President Dionisio D’ Aguilar said this report fuels the concerns of the business community that already fears the tax.

“The government has not made the case where the introduction of value added tax is not going to create an inflationary situation. I can’t see where it is not going to cause prices not to go up. And everybody is talking about prices going up from anywhere between 10 and 15 per cent in order to accommodate this increase in value added tax especially those in the service industry,” he told the Bahama Journal in an interview.

“For companies that don’t import a lot you are now having to collect 15 additional per cent. You either add it on to your price or you eat a portion of it because your customer just isn’t willing to pay an additional 15 per cent for the service that you are selling. So there is no doubt in my mind that it is going to cost an inflation effect because when prices go up and wages don’t budge you are going to have a decrease in economic activity.”

Mr. D’Aguilar pointed out that most businesspeople understand that the government needs to create more revenue because it is spending more than it is taking in.

But he said economists should come together to find other ways to achieve that goal.

“Instead of borrowing the money they want to just get it from tax revenue. So basically you are taking it out of the economy to pay for what you are already spending. It is not as if the economy is going to increase because it is already spending that money. It is running huge deficits,” the businessman said.

“No one is excited about the introduction of new taxes. Anytime you increase taxes there is a huge pull back. The government has one of two choices – it can either increase what it brings in or reduce what it spends. Now, if it reduces what it spends one might argue that that too can cause an economy and cause a recession. The fact of the matter is I agree to a certain degree with what the Nassau Institute has to say. All of these businesses now have to change the way that they do business. You have to pay more taxes to the government, you have to track it more and it is very depressing for a businessperson. It doesn’t get me excited to expand my business.”

But State Minister for Finance James Smith disagrees.

He argues that the government has no choice but to introduce a new tax system because the government’s spending habits cannot be sustained.

“No services are now taxed directly and the VAT will now take into account so at the very least you will be taxing both goods and services. So the government should get more revenue. No one can predict the outcome of the introduction of a new fiscal regime – involving a new tax. But it is highly probable that the government would receive increased revenues and that is likely to reduce the overall deficit,” he said.

“There are a couple of things that are being overlooked. The government walked into a huge deficit and huge build up in debt. If that continues and nothing is done about it the country would be worst off, even the ones that are complaining will complain more if you have to devalue you currency or because of a series of downgrades from international agencies or the inability to even borrow money or that you cannot put in place the necessary things that governments do – like education, health care and law and order.

“You can have a form of chaos if we continue down the road we are going.”

Mr. D’ Aguilar is now urging the government to present the information on VAT as soon as possible to decrease the panic among businesspersons.

“They need to get ahead of this and explain and say look this is what we think is going to happen. The fact that they are just letting it out drips and drabs of information is annoying. For example, what is the rate of duty going to be once we introduce VAT? That is a critical number. Get it out there,” he said.

“We are eight months away from this thing being introduced and it is still very fuzzy on how this is going to work.”

Prime Minister Perry Christie said back in February that, “Intended with the introduction of this new system it is also proposed to affect the eventual reduction in import duties that will accommodate The Bahamas’ accession to the WTO, to reduce excise tax rates to compensate for the VAT, eliminate the business licence tax as currently structured and to replace the hotel occupancy tax.”

The prime minister said the new proposed tax system will also level the playing field for the poorest and wealthiest Bahamians.

VAT is expected to come into effect on July 1, 2014.

September 18, 2013

Jones Bahamas

Caribbean Blog International

...the numbers business is not only popular and a cultural norm ...but is one of the biggest contributors to the Bahamian economy ...says - business consultant, Paul Major

Gambling Debate Intensifies


By: Theo Sealy & Rogan Smith
The Bahama Journal



Two top clergymen, a leading hotelier, a business consultant and a college professor locked horns tighter than ever last night over the controversial gambling issue.

Retired Anglican Archbishop Drexel Gomez, Bahamas Christian Council (BCC) President Dr. Ranford Patterson, Kerzner International VP of Public Affairs & Retail Services Ed Fields, business consultant, Paul Major and educator and civil activist, Margo Blackwell all participated in a Jones Communications Network (JCN) town meeting series at the Harry C. Moore library where they each took turns highlighting the benefits or pitfalls of gambling.

The panel was split.

Opponents argued that gambling was destructive and against God’s will, while proponents touted the economic benefits that could be gained from its legalisation.

The Christie administration has announced plans to hold a referendum before the end of the year so that Bahamians can decide whether they want gambling legalised.

The BCC has repeatedly stressed that it is “diametrically opposed” to gambling and it didn’t stray from that premise last night.

“To engage in this gambling . . . one is going counter to what Jesus stands for and for what the church is here to promote. We believe that gambling is, in its final analysis, an affront to God,” Archbishop Gomez said.

“Our problem in the church is we have been compromised by our members in that so many of our members gamble and so many of our members do not really believe what the church teaches us because if they really believed, they would apply it in our lives. So, there are a lot of persons who belong to the church who participate in gambling because they aren’t putting into practice the teachings of the gospel. Gambling produces social dislocation. That is not disputed even by persons who engage in gambling.”

Mr. Major, meantime, said the church cannot legislate morality.

“It comes down to a matter of civil liberty – people deciding what they want to do with their disposable income,” he said.

“The only ones who don’t benefit from gambling are the government and the citizens who don’t gamble. At this stage in our development and enlightenment we should not be so concerned about whether Bahamians gamble.”

Dr. Patterson said with gambling, “we can only lose, not win.”

“The negative effects outweigh benefits. It can destroy a family. Every day in our ministries we are confronted with persons who are marginalised, persons who are experiencing loss, persons whose lives are falling through the cracks and that is why we feel so strongly about this because we see the devastation. That’s where our passion comes from,” Dr. Patterson said.

“Think of the devastation that we now see and the proliferation of the web shops. We believe it’s only going to get worse and our people are going to suffer as a result of it.”

But, one audience member chastised the church for its weak arguments on the controversial issue.

“I have been listening to a lot of debates on this gambling subject and it seems that the church is relying on the argument of morality. As it stands right now those arguments are not standing up very well against the arguments that these other panellists are presenting. Why isn’t the church presenting strong arguments about the economic and social impacts of the numbers business? These are the issues we need to present as opposed to what is morally incorrect,” she said.

Mr. Major, meantime, sought to dispel the notion that the ‘house’ always wins.

He told the panel and attendees that two number houses “went broke” because they couldn’t pay out winnings.

“On average 60 to 70 per cent of winnings go back out,” he said.

When challenged to substantiate his claims by providing the statistics, Mr. Major responded, “Trust me, trust me.”

He later said the numbers business has attracted 150,000 account holders.

He said 120,000 of those individuals have online accounts, while the remaining 30,000 individuals are walk-in customers to various web shops throughout the country.

Mr. Major suggested that the numbers business is not only popular and a cultural norm, but is one of the biggest contributors to the Bahamian economy.

Ms. Blackwell, careful to “stay far away from moral and social values as possible,” said she felt that Bahamians are being denied a right to gamble.

“I am a young lady who has lived her whole life being discriminated against in an independent Bahamas by a constitution that allows people who are not Bahamian to do something in my country that I am not allowed to do. I have a real problem with that,” she said.

Mr. Fields, meantime, said the gambling issue is not about its decriminalisation, but its liberalisation.

Churches have over the years demonised gambling in The Bahamas, but many have turned to major resorts for donations even though a good chunk of their revenue comes from casino dollars.

Mr. Fields said in his 16 years at the Paradise Island resort, he has received a letter from every single denomination in The Bahamas requesting donations.

He later questioned the difference between church raffles and the numbers business.

“Either you are hot or you are cold. The reality is that if I buy a raffle ticket my intent is to win over someone else…we are in a quagmire trying to justify this thing. Either we like them all or we wipe them all out. It cannot be a case of juggling. It cannot be that it is okay for the church to gamble through raffling but it is not okay for Bahamians to do the same through gambling at numbers houses,” Mr. Fields said.

“Yes numbers is illegal and perhaps there is a problem with the concept that because it is illegal on the books the donation from that illegal gambling is a problem. But there is not a problem with the church asking donations from an entity that has legal gambling. So gambling is okay if it is legal? That must be what the message is.”

Mr. Fields said if Bahamians vote to legalise the numbers business, the government could take a percentage of the money and set up counselling for addicts.

Gambling proponents say if the numbers business is legalised it could fund various government initiatives and provide millions of dollars to the public purse.

“It would do well for us here in the country if we go ahead with legalising the numbers business. It can contribute significantly to health care, sporting and education, overall helping with national development. We need to move forward with this and try to look at the positive side of how beneficial gambling can be, economically, to The Bahamas,” attorney Wallace Rolle said.

JCN CEO Wendall Jones moderated the town hall meeting.

August 10, 2012

Jones Bahamas

Caribbean Blog International

COMMONWEALTH OF THE BAHAMAS ... SPEECH FROM THE THRONE ... DELIVERED AT THE OPENING OF PARLIAMENT ... BY HIS EXCELLENCY SIR ARTHUR FOULKES ... GOVERNOR-GENERAL ... WEDNESDAY, 23RD MAY, 2012

Madam President and Honourable Senators,
Mr. Speaker and Members of the Honourable House of Assembly,


Today’s Opening of Parliament follows upon my Government’s election to office just sixteen days ago.

My Government has been entrusted by the Bahamian people with a clear and overwhelming mandate to effect important and far-reaching changes in our country for the benefit of all.

The challenges that confront us in The Bahamas today are as numerous as they are complex.  Accordingly, my Government will present an ambitious and extensive agenda for this new Parliament.  The Bahamian people expect and deserve nothing less.

Central to that agenda are two overriding imperatives -

Firstly, the need to reduce violence and crime and build a safer Bahamas.

Secondly, but in tandem with the fight against crime, is the need to build a stronger economy that generates jobs, deepens and broadens Bahamian ownership and produces a higher standard of living for all Bahamians.

Those twin imperatives will dominate the agenda for action of my new Government.

At the same time, however, my Government will also move as resolutely as fiscal realities allow to implement the full range of programmes, legislative proposals and policy initiatives promised in the platform entitled ‘Charter for Governance’.

In this regard, urgent priority will be given to the implementation of the action-plan outlined in the Charter for the first 100 days of my Government.  The implementation of this ‘First 100 Days’ plan is, I am pleased to report, already in stride, as witness the implementation of two of the action-items within the very first week of my Government coming to office, namely, the creation of the Ministry for Grand Bahama and the restoration of the Ministry of Financial Services.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


Violence and crime corrode the very fabric of a nation. They must therefore be attacked and eradicated at the root if we are to build a secure and prosperous society.  My Government is absolutely determined to pursue this objective with unbounded energy, imagination, and unwavering dedication.

My Government will immediately reinstate and expand the Urban Renewal Programme to serve as a core instrument to combat the underlying social causes of crime and violence.

My Government will establish an Urban Renewal Commission to facilitate inter-agency collaboration and coordination in the delivery of services to the community.

My Government will, as a matter of high priority, introduce a national Crime Management Agenda comprising effective prevention, detection, prosecution and rehabilitation.

My Government will move for the repeal of all provisions of the Police Act which are unconstitutional or attempt to politicize the Police Force or undermine the impartiality and security of tenure of the Commissioner and Deputy Commissioner of Police.

My Government will also create a National Intelligence Agency comprising all law enforcement departments to address all categories of major crimes on a co-ordinated basis and with a greatly improved intelligence-gathering capability.

My Government will also develop a National Firearms Control Strategy and establish a proper Firearms Department and Database.

My Government will also re-introduce the Swift Justice Initiative to ensure the timely prosecution of cases and reduce the number of persons released on bail for serious crimes.

My Government will also re-introduce, as a matter of the most urgent priority, the Witness Protection Programme so as to ensure that key witnesses and their families are protected.

My Government will also move to amend the Rehabilitation of Offenders Act to assist young and first-time offenders in embracing a life founded on the values of honesty, hard work and respect for the life and property of others.

My Government will also as a matter of high priority, reintroduce School-Based Policing to curb school violence.

My Government will also re-vitalize the Tourism-Based Policing Initiative to enhance visitor safety.

My Government re-affirms its determination to more effectively police our borders against illegal immigration, drug trafficking, human trafficking, illegal firearms, and poaching.  The Royal Bahamas Defence Force will therefore be re-equipped and re-positioned to more effectively combat these menaces.

In accordance with its Charter for Governance, my Government will also hold a referendum for the Bahamian people to decide whether a national lottery should be instituted and/or whether webshop-type gaming should be decriminalized but nonetheless regulated in accordance with internationally-accepted best practices and in a way that would ensure optimal revenue-generation for the country.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


The plight of homeowners in financial distress must be addressed if a stronger economy is to be restored.

My Government will therefore work with the clearing banks and other institutional lenders to develop a financially sustainable mortgage relief programme aimed at assisting distressed homeowners in saving their homes from foreclosure.  Participation in such a programme would be voluntary.

My Government will also seek to bring employee pension funds under closer regulation and supervision to ensure that pension funds are duly protected; and that trustees and managers of pension funds are held to higher standards of transparency and accountability; and that employees are afforded access to their pension savings for emergency purposes, including mortgage relief.

My Government, in an effort to stimulate the real estate market, will also make good on its commitment to lower the maximum rate of stamp duty on land sales from 12 per cent to 10 per cent; and will also re-introduce a maximum cap on real property tax.

My Government will also enact amendments to the Subdivisions Act to make the building and planning process more efficient and less costly.

My Government, in an effort to help reduce the cost of rental housing, will reform the Rent Control Act and will seek to promote the construction of new rental units at more affordable prices.

My Government will aggressively pursue the expansion of affordable housing especially for lower income Bahamians.  My Government regards this as a social priority that requires focused and sustained attention.

My Government will also seek to provide additional land for home ownership through the purchase of vacant and abandoned lots as a part of the Urban Renewal Initiative.

My Government will create a reliable land register and a proper system of land registration.

My Government will also review and amend as necessary the laws relating to commonage land so as to allow for greater commercial use and beneficial enjoyment of land by commoners.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


My Government is deeply wedded to the belief that private enterprise should remain the primary engine of job creation and entrepreneurial opportunity in our country, and that tourism and financial services, supported by industrial expansion, fisheries and agricultural production, should be the chief areas of economic activity in our country.  In this regard, my Government is committed to the formulation and execution of policies that will encourage private investment in these areas while maximizing job creation and career development for Bahamians in the shortest possible time.

As small and medium-size enterprises are the job- creation engines of today’s economy to an ever-increasing extent, my Government will re-focus the mandate of the Bahamas Development Bank and the Bahamas Agricultural and Industrial Corporation (BAIC) to provide equity, credit guarantees and marketing and accounting support for fledgling businesses.

The necessary enabling legislation will be introduced by my Government as a matter of priority.

My Government will also implement a number of initiatives, including the grant of special concessions, to promote the economic development of Grand Bahama, and to facilitate the extension of the same benefits that are available under the Hawksbill Creek Agreement to east and west Grand Bahama.

In order to revitalize our critical tourism industry, my Government will seek to increase the number of available and affordable rooms.  Promotional efforts will explore opportunities for tourism growth in niche markets inclusive of film, entertainment, sports, health and religious tourism, as well as medical, heritage and eco-tourism.

The cultivation of new markets in Asia and Latin America will also form a key part of the national tourism promotion plan.

My Government will give focused attention to the refurbishment and re-development of downtown Nassau to make it a pedestrian and shopper friendly city while retaining and enhancing its historical appearance.

My Government will work in collaboration with local and foreign air carriers to improve airlift to and throughout the Islands of The Bahamas.

My Government will also create opportunities for Bahamians to own hotels through a National Resort Development Initiative.

Recognizing that agriculture is an integral part of any sustainable economic development plan, my Government will give focus to increasing food production as a vehicle to promote food security, create jobs and boost domestic investment.

My Government will initiate plans to construct a Bahamian Food Sciences Institute in North Andros with a view to incorporating it into the University of The Bahamas.

My Government will also aggressively pursue the development of a mariculture industry in The Bahamas and the further diversification of a fisheries industry which is reserved for Bahamians.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


My Government believes that education is the principal vehicle for promoting the economic development of individuals and the nation as a whole in the overarching framework of a rapidly evolving 21st century global economy. Education is the key to both personal and national empowerment.

Conscious of that truism, my Government will seek to reform our educational system to bring it more technologically in tune with 21st century challenges and to better position Bahamians to compete for jobs both locally and on a global level.

My Government will review and strengthen the National Literacy and Numeracy plans both of which are critical to educational achievement and economic advancement.

My Government will also introduce a standardized National High School Diploma programme to ensure that graduating students meet stipulated minimum levels of proficiency.

My Government will also develop a national regulatory framework to establish, at the secondary school level, a system of Career Path Academies.

Legislation will also be placed before you to establish the University of The Bahamas.

Regulations will also be developed to establish and oversee new standards for Preschool and Early Childhood Education.

My Government recognizes the important role played by the Bahamas Technical and Vocational Institute (BTVI) in training and re-training Bahamian workers.  Accordingly, the Council for BTVI will be appointed with a view to bringing the BTVI Act fully into operation as rapidly as possible.

My Government will also seek to provide enriching experiences for our youth through innovative programmes that promote cultural and self awareness, community service, social skills training, mentorship, knowledge of civics, and exposure to principles of leadership and responsible citizenship.

“Centres of Excellence” for sports will also be established within Family Island communities to help identify and develop sports talent.

My Government will also promote cultural expression in the visual, performing and literary arts; expand cultural education programmes; and enhance stakeholder participation in the development of our cultural heritage.

My Government will move swiftly to end all forms of discrimination, especially against persons with disabilities.  In keeping with this commitment, legislation will be enacted.  The United Nations Convention on the Rights of Persons with Disabilities will also be signed and ratified.

My Government will bring about the full implementation of the Child Protection Act, 2007.

In an effort to reduce poverty, promote human capital development and improve the effectiveness and efficiency of social assistance programmes, my Government will move speedily to undertake Social Safety Net Reform.

In the area of health care, my Government is firmly committed to the principle of universal access to health care, decentralized health-delivery systems; and a re-engineering of systems for financing the delivery of health care so that it can be more affordable.

My Government will also take steps to advance our nation’s preparations for the introduction of National Health Insurance in a financially sustainable way.  My Government’s commitment to National Health Insurance remains undiminished.

My Government will facilitate the Public Hospitals Authority’s acquisition of new cancer-screening technology to ensure that Bahamian women have access to state-of-the-art mammogram machines at both the Princess Margaret Hospital in New Providence and the Rand Memorial Hospital in Grand Bahama.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


My Government will seek to amend the Local Government Act to better define the parameters for the employment of persons providing service to Local Government Councils.

In the area of air transport which is so vital to our archipelagic nation, my Government will overhaul the existing air sector policy to create a safer and more efficient air transport system. This will include the creation of a modern civil aviation regulatory regime, the creation of a fully independent body to investigate air accidents, enhanced communications technology and upgraded radar equipment.

Additionally, steps will be taken to address the management of the Bahamas Flight Information Region (FIR), which will permit access to overflight fees on The Bahamas’ upper airspace.

In relation to maritime transport which is no less vital to our national interests, my Government will procure the implementation of maritime safety standards, protocols and inspection regimes on all national ships and personnel, and the adoption of the Caribbean Ship Safety Code and Small Vessel Code.

To encourage environmental sustainability in Freeport, Grand Bahama the Freeport Bye-Laws Act, 1965 will be amended to impose mandatory standards for environmental management.

My Government will develop a national water policy in conjunction with all stakeholders and will ensure the proper extraction of ground and potable water so that all Bahamian communities will in the shortest possible time have access to piped potable water.

My Government will initiate a plan to lower the cost of electricity throughout The Bahamas through the development of alternative energy production and improved efficiency at BEC in the areas of administration, power production and equipment maintenance.

My Government will review the Regulations established by the Utilities Regulation and Competition Authority (URCA) to ensure that they conform to the Constitution and reflect Bahamian values in the context of responsible freedom of expression in a democratic society.

My Government will finalize its longstanding Foreign Service Orders for the enhancement and strengthening of a professional Foreign Service.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


There is an emerging national consensus that the Bahamian tax system is simply inadequate to meet the needs of a modern 21st century society. My Government will therefore launch an extensive review of the Bahamian tax system with a view to proposing alternative means of taxation that address the problems of the current system while providing the Government with a stable, buoyant and adequate source of revenue to meet its governance obligations to the Bahamian people.

My Government will introduce legislation to establish a council of economic advisors. The role of the council will be to develop policy recommendations for Government on the major issues pertaining to economic growth and stability, including tax reform.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


There will also be laid before you legislation to prevent the entering into of government contracts, including contracts of employment, or the payment of public monies in connection therewith, between the date of dissolution of Parliament and the date of a General Election unless such contracts or such payments are pre-determined by an independent statutory body to be absolutely critical for the maintenance of essential services.


Madam President and Honourable Senators,

Mr. Speaker and Members of the Honourable House of Assembly,


As my Government now sets about the urgent tasks that I have just outlined it shall be forever mindful that in all things God must come first and that without Him at the centre of our efforts we labour in vain.

My Government shall also remain mindful of the need for complete integrity in the stewardship of the people’s affairs.  Its commitment in this regard is absolute and will remain so.

Finally, my Government believes in Bahamians and in the capacity and determination of the Bahamian people to overcome all the many challenges that lie before us.  Armed with a common purpose and united in patriotism and love for one another, we shall indeed overcome, and achieve for our nation the greatness that is its destiny.

I pray that the blessings of Almighty God may rest upon your counsels.

bahamas.gov.bs

 

In light of the challenges that our economy faces and the general consensus that we must revisit our economic model... it is disturbing to see that little is being said about the proposed fiscal policies of political parties as we enter the heart of the 2012 general election campaign

Confronting the debt crisis pt. 2

by Arinthia S. Komolafe

Last week we explored the effects that monetary policy at the turn of the millennium may have had upon the current mortgage and overall debt crisis.  As several individuals are calling for a further reduction of the discount and prime rates (DR and PR), it is important to note the impact such a move will have on individuals’ credit positions and financial wellbeing.

There is no doubt that the reduction of the DR and PR proved beneficial to the government in that it provided the government with an opportunity to service its debt at a lower interest rate, even though the overall benefits to consumers appears to be minimal.  On the other hand, the reduction of the DR and PR would have negatively impacted some organizations, Financial Institutions (FIs) and the National Insurance Board, as they would have lost millions of dollars in investment income.

In the final analysis, FIs usually win and are rarely dealt the bad hand of the stick in any situation within a credit-driven and consumer society like The Bahamas.  Financial Institutions in response to the aforementioned reduction imposed charges in other strategic areas, increased some of their fees and maintained their rates for consumer loans.  We have witnessed quiet increases in FIs’ fees for transactions such as ATM or passbook withdrawals – service charges on accounts and additional fees were applied to loans in the aftermath of the rate reductions.  A well-known fact is that the ultimate and main loser is usually the consumer who on the one hand receives a ‘supposed’ break on his debt servicing due to the DR and PR reduction, but pays hidden fees and charges on the other hand.

The net effect on the consumer is that he/she ends up paying the same amount and in some cases more to the FIs, which may result in non-performing loans or lost property to foreclosure.  This reinforces the point that an active Consumer Protection Commission ought to be in place to provide checks and balance on behalf of consumers relating to financial transactions among other things.

In addition to providing debt-servicing relief, it is expected that further reduction in the DR and PR should have also provided access to credit at a cheaper rate for individual and business consumers. The positive effect for business owners is that it creates the opportunity for expansion of the business and/or maintenance of inventory levels.  However, it is estimated that approximately one third of commercial banking loans extended to Bahamian companies are in arrears.  If businesses are faced with increased energy and gas costs combined with tax increases in National Insurance, business license fees and other diverse areas, it becomes less possible for businesses to be sustained during the current economic climate and more importantly create jobs that will help stem the growing unemployment rate.

The likelihood of FIs extending credit under already constrained circumstances is lower than normal and the underwriting of new loans is being done with extreme caution – a prudent course of action.  This further emphasizes and highlights the importance of and the urgent need for a functional and effective credit bureau.  It is noted that the Central Bank of The Bahamas had obtained assistance from the Caribbean Regional Technical Assistance Center (CARTAC) with the aim of establishing a credit bureau, albeit the process has been ongoing for a few years.  Considering the history of adjustments to the DR and PR, these rates are normally revised (downwards for the most part) not more frequently than in five-year intervals.  Whereas this does not suggest that monetary policy should be stalled or be predictable, the historical trends suggest that there is ample time to establish a credit bureau prior to any potential adjustments to the DR and PR.

What are the fiscal policies of the political parties?

In light of the challenges that our economy faces and the general consensus that we must revisit our economic model, it is disturbing to see that little is being said about the proposed fiscal policies of political parties as we enter the heart of the general election campaign.  It is a well-known fact that during the election campaign seasons in the past, we have heard politicians produce their grand ideas of what they intend to do for the Bahamian people.  The important part of the equation is, however, often omitted and very rarely if ever do we hear about how they propose to ‘foot the bill’ for their grand but necessary ideas.

It seems inevitable that the next government post the 2012 general election will have to continue this spate of borrowing at least during year one of governance to ensure the government is able to meet its obligations.  Fortunately, government debt servicing has been aided by one-off payments in 2011 from the sale of the Bahamas Telecommunications Company and capital inflows from Baha Mar. However, the likelihood of similar capital injections for 2012 is slim.  A part from a significant turnaround and increase in tourism numbers and the government’s ability to constrain its spending habits, it is difficult to see how we will get ourselves up out of this national disaster.

Our politicians seem to have mastered the art of avoiding reality and failing to inform us that hard decisions will have to be made.  In essence, austerity measures are not unforeseeable and it could be argued that these measures are unavoidable.  Of course such declarations are unpopular (albeit they would be truthful) and politicians fear the potential backlash of such honesty.  The government has continued to borrow in the midst of declining revenues and increased taxes that placed a heavy burden on the Bahamian people.  It would not be surprising, therefore, if the current tax levels are maintained or increased to meet budget requirements.  Unfortunately, the persons most affected by these tax burdens form part of the working and shrinking middle classes.  In the absence of foreign direct investment or new sources of revenue, any reduction in taxes will most certainly require the government to carry out extreme measures to cut its spending, increase the efficiency of state-owned enterprises to stop wastage and implement efficient tax collection policies.

The national debt crisis constitutes an unwanted and unsolicited gift to future generations of Bahamians that threaten their opportunity for economic prosperity.  This crisis and prevailing macroeconomic indicators makes it difficult to see any significant economic growth in the near future.  Our leaders and all of us must rise above the partisan politics and make a concerted effort to place our economy back on track.

 

• Arinthia S. Komolafe is an attorney-at-law.  Comments can be directed at: arinthia.komolafe@komolafelaw.com

Confronting the Bahamian debt crisis pt. 1

Mar 15, 2012

thenassauguardian

Caribbean Blog International

Policymakers and other interested parties would need to closely monitor the national debt situation to ensure that the nation’s economy remains healthy and that our living standards are not threatened by excessive public sector debt

The national debt

thenassauguardian editorial

Governments, international agencies, rating agencies and most businessmen regard the level of national debt to the size of the economy (GDP) as one of the most important economic indicators in assessing the current and future health of the economy.

The national debt consists of funds borrowed directly by the government plus any debt of the government corporations which have been guaranteed by the government.

Governments usually borrow funds when there is a need to undertake capital projects (office buildings, schools, roads, docks etc.) and the revenue from taxes is insufficient to cover the capital works.

The size of any economy determines the level of potential taxes that could be collected to meet government expenditure needs for, among other things, education, health, law enforcement, social welfare and of course, debt servicing of any loans taken out by the government.

Current and future living standards in any country are influenced by the amount of resources applied by governments, on a yearly basis, to education, health, national security, social welfare and other public sector areas.

In order to ensure that sufficient resources are available on a sustainable basis for those fundamental public sector functions, good fiscal management compels governments to restrain the growth in debt servicing to a level where it does not threaten to crowd out and push aside the needs of the other important sectors of society.

In many third-world countries in Africa, Asia, Latin America and the Caribbean, the public resources from tax revenues to finance public debt have exceeded the public resources allocations for education and health; a position considered by many as an undesirable path towards the lowering of living standards.

In an attempt to address poor policy choices by governments, international agencies such as the IMF (International Monetary Fund), World Bank and the IDB (Inter-American Development Bank) which provide economic advice on a global basis, urge governments to try and keep debt ratios (total national debt as a percentage of total national output or GDP) to a reasonable level.

In the case of developing countries such as The Bahamas, the level suggested is somewhere in the region of 40 percent.

Most countries, particularly those in the developing world, have fallen short of that objective.

Indeed, with the exception of Trinidad and Tobago at 26 percent, many developing countries are in the high 80s (Barbados) or, in some cases the ratio exceeds 100 percent, (Jamaica at 123 percent for example), while the European countries have set the debt to GDP ratio at 60 percent as the desired level for their community.  Our nearest neighbor and largest trading partner, the United States, has a debt to GDP ratio that stands at an unusually high level of 97 percent.

When a country’s debt to GDP is high, it implies that the country is struggling and could have difficulty servicing its debt.

Currently The Bahamas’ ratio is in the high 50s and growing.

It is not yet in troublesome territory, but given the trend over the past few years and the growing commitments to further borrowing, including the Chinese loans and the associated capital needs of the utility companies, there is surely some cause for some concern.

The policymakers and other interested parties would need to closely monitor the debt situation to ensure that the nation’s economy remains healthy and that our living standards are not threatened by excessive public sector debt.

Oct 25, 2011

thenassauguardian editorial

Caribbean Blog International

Hubert Ingraham should have invested not in roads but in the future of our youth... ... infrastructure work has not acted as a major stimulus to the economy... We are still experiencing almost zero growth

Ingranomics Part 1

By Ian G. Strachan

Last week we looked at some of the positives of the FNM’s term in office.  It’s time now to look at the flip side. What did they get wrong; where did they blow a golden opportunity and what damage have their decisions caused?

 

PLAYING IT BY THE BOOK

You’ve heard it many times but the world has been grappling with a global economic meltdown.  The USA, our biggest trading partner, has 14 million people unemployed and eight million people who can only find part time work.  In one year alone (2008-2009), U.S. unemployment increased by a mind-blowing 60 percent, from around nine to 14 million.  As the USA goes so do we.

The Ingraham administration weathered this crisis and it has been weathered largely through government borrowing and a concomitant refusal to adopt serious austerity measures. The result is a scary level of national debt which is costing us roughly $300 million a year to service (almost 40 times what we are spending this year in the Ministry of Agriculture and Marine Resources).

Now the orthodox economic approach, as I understand it, is that when your economy makes a downward turn--which all economies naturally do--governments must increase their spending to stave off unemployment and to keep money flowing.

Governments normally spend on infrastructure in times like these, so that when the economy rebounds, private business can more easily and effectively do its thing and the citizenry generally can enjoy a good quality of life (in so far as infrastructure lends itself to that).  Governments also have to figure out where to cut taxes as an incentive or to ease pressure and where to increase taxes and or tighten tax collection so they can continue to do their work despite the lean times. (NIB has been more diligent about collection, for instance, and this year we saw a reduction in the prime rate.)

Few governments in the world run on a surplus; they mostly run on a deficit and borrow to make up the difference.  A developing island nation like ours, with a little, one dimensional economy, but with citizens who have First World expectations, has had serious pressure placed on it these last four years.  Ingraham had no choice but to increase borrowing to maintain the bubble we live in and avert disaster; there was simply no other option.

The question voters must ask is, did we borrow money for projects that put us on the best possible footing going forward as a country?  Did we use this economic crisis as an opportunity to set our house in order and do some things we didn’t previously have the will to do?  Did our government also do everything in its power to increase its revenue base (a challenge in lean times) while at the same time being sure not to burden the small man with more taxes at a moment when he was least able to sustain it?

 

STIMULUS?

The FNM’s heavy emphasis on infrastructure, (and the kinds of infrastructural work chosen), has not eased the level of frustration and suffering in the country; in fact it has increased it for many.

First of all, infrastructure work has not acted as a major stimulus to the economy.  We are still experiencing almost zero growth.  These massive projects have not put a whole lot of money into the Bahamian economy.  One, the work has been done for the most part by foreign firms and two, most of the materials needed are imported, which means more money leaving than staying.  Three, they haven’t employed anywhere near the necessary number of Bahamians (even temporarily) to significantly ease the hardship in the society.  We needed to employ 7-10,000 to truly lift ourselves out of the doldrums and it just hasn’t happened.

One project that could have employed that many people in the short and long term is Baha Mar, but the deal cut with China ensures that much of the money spent will go right back where it came from and most of the temporary jobs too.  It was just a lousy deal and Parliament never should have agreed to it.  The PLP will argue that the FNM’s stopped, review and cancel policy stalled projects like Baha Mar and caused our economic slowdown.  I don’t buy it.

But whereas the FNM may argue that they invested the millions they borrowed in infrastructural improvements that will stand the test of time (they hope) and did not frit it away on nebulous programs/schemes that might have questionable long term benefits to the country, their approach was unimaginative, overly conservative and made life worse for Bahamians in the short to medium term.  The Ingraham administration demonstrated an unwillingness or inability to innovate or experiment. (The humble Self Starter Programme was the riskiest innovation they attempted in my view, but I would love to be corrected.)

The road works caused a number of homegrown businesses to die and displaced others.  It also made it difficult for businesses all over the island to deliver goods and services and made it difficult for employees to get to and from work.  And this has been going on for two and a half years.  I can’t begin to imagine how much that has cost individuals and businesses in time and money.  And the FNM government has been unable to convince anybody that they intend to make amends in some way during their term in office.

In the final analysis I can’t name one industry that the Bahamian government has helped to experience major growth through its powers to borrow, invest and to incentivize with tax breaks, so much that thousands of new, permanent jobs were created.  No, forget thousands, even hundreds.  Fishing?  Farming?  Light manufacturing?  Have we simply resigned ourselves to more decades of low productivity in these areas?  There’s nothing we can do to get things going in these sectors?

We are spending eight million out of our 1.9 billion dollar budget on Agriculture and Fisheries. That’s less than one half of one percent.  That is tragic.  Even a man as well meaning and thoughtful as Larry Cartwright can’t make miracles happen with that (especially in a nation where the men scoff at farming and fishing and all want to work a hotel job).  According to Cartwright 76 percent of government land leased to farmers is abandoned and 25,000 acres of available arable land lies dormant waiting for a small farmer to apply.  Well, I guess we’ll keep waiting.

 

DIG UP DIG UP

The FNM could have followed the recommendations of the experts they hired decades ago and created a single, Bahamian-owned bus company through public-private partnership and the economic times would have provided the perfect cover for doing so. This would have reduced traffic congestion, brought greater discipline and order to the society, increased efficiency, created new, permanent jobs, created opportunities for new satellite businesses, lowered the cost of living for many and hopefully increased tax revenue.  All for a fraction of the cost of the road works.

Instead, they chose to do road work and more roadwork.  As such, many believe Ingraham chose to reward his political allies with contracts and pass on the headache of the buses to future governments.  Instead he’s given two thirds of our nation a head ache.  His gamble is that the new roads will be appreciated by May 2012.  But he may very well lose that bet and lose power because of these roads.  I wonder, how much of these road works have been forced on us by these agreements we have made with China or Baha Mar?  The government should publish the Heads of Agreement docs in the papers and on line.

If I am going to risk losing an election over something unpopular, I’m going to at least make sure I lose over something that really will make life better for as many people as possible and will do the most lasting good.  Few think the Big Dig Up will do either.

They could have spent some of those millions in capital works on expanding The College of The Bahamas, which is a major employer and which empowers thousands and can empower even more Bahamians young and old.  Higher education is the most reliable avenue to escaping poverty, yet only 10 percent of Bahamians get a college education.  Expanding the college would create jobs within it and around it, it would allow more money to stay in The Bahamas since more students could attend, and it would ensure that we have a more competitive workforce in this information age.

COB needs more land, more classrooms, better labs, and bigger and better dormitories.  Ingraham should have invested not in roads but in the future of our youth.  He should have bought up the land surrounding the Oakes Field Campus, re-amalgamate BTVI and COB, and develop COB according to a Master Plan.  Instead Ingraham slammed brakes on the college’s growth by cutting its budget in 2009 and 2010, and he continues to ignore, abuse and mismanage BTVI (like the PLP before him).

What he will try to sell us on is that he modernized New Providence.  I suppose he tried in his way, but there are some holes in that one. Big holes. (I think I drove into one last night and almost drowned).

More next week.

Sep 26, 2011

thenassauguardian

...how do we regain a positive outlook for the economic future of our country and avoid the actual downgrading of The Bahamas’ rating?

Improving our economic situation

By Alfred Poitier

The fact that the outlook for the Bahamian economy has been downgraded to negative by Moody’s should come as no surprise to the opposition or the governing party of The Bahamas.  As a matter of fact, the downgrading is water under the bridge.  It is now time to avoid the water from rising over the bridge.  The pertinent question is how do we regain a positive outlook for the economic future of our country and avoid the actual downgrading of The Bahamas’ rating?

Moody’s has listed specific reasons for the negative outlook for our economic future which are listed below:

• Debt increased by 150 percent over the past decade

• Debt increased by 40 percent in the last two years

• Debt to gross domestic product is 40 percent above the average

• Economic growth has been a modest six percent over the past 10 years.

Simply put, if your revenue is not increasing proportionately to your increasing debt then at some point your revenue will not be able to pay your debt.  This is the major concern of Moody’s and thus the negative outlook rating that it gave The Bahamas.

Our slow economic growth cannot sustain the continuous high level of borrowing.  The constant budgetary deficits must be addressed and actual payments on our national debts need to begin.  Government needs to work towards a balanced budget and stop spending more than we make.

The blame game needs to be thrown out of the window.  The fact is we have borrowed beyond safety levels and now we must find ways to correct this situation.  The easiest way to correct this challenge is to simply boost our revenue.  Governments usually boost revenue by increasing taxes, which unfortunately increase the cost of living for citizens of the country.

However, creative governments find other ways of increasing revenue such as providing incentives for citizens to do more within the existing tax structure, creating more revenue by increased volume. Creative governments also look at providing incentives for new industries that will not only provide needed services to residents, but also improve the quality of life for them and create new streams of revenue for the government.

Many opportunities have been placed before our governments to diversify our economy by encouraging Bahamian ownership in new industries.  But we have missed the boat, or for whatever reason, failed to embrace them.  There is no doubt that the government needs to find other means to grow our economy.

Foreign investment is good mainly for the short-term but as the foreign investor makes his profits over time he will more than likely send his profits out of the country.  In the long-term his investment may not be as beneficial as if a Bahamian did the same investment, as chances are his profits will remain in The Bahamas and probably even be invested in another venture.

It is time for us to seriously consider the natural resources that we have been blessed with and utilize these resources to the benefit of our citizens.  Serious consideration should be given to drilling and the processing of natural gas, first and foremost, for local consumption.  This could help reduce fuel costs for necessities such as electricity, transportation and so much more.  This would also reduce the level of importation of fuel products and could provide export revenue for the country as well.

The problem is our government relies heavily on gasoline taxes and may be reluctant to promote anything that would reduce the amount of gasoline imported to the country.  However, consideration should be given to the fact that the new industry could very easily provide equal or greater revenue to the government provided proper licensing fees and reasonable taxes are applied.

I used natural gas as an example of the natural resources we do have in The Bahamas.  However, there are many other areas of industry that The Bahamas is poised for based on either location or natural resources.  Simply putting a plan in place to explore, with the intent to execute one of these options, can change our present economic outlook from negative to a minimum of stable.  Yes, I did say just putting a plan in place.

Obviously prudence must play the major part in addressing the financial ills of our country but governments must show faith in the citizens through the provision of opportunities through legislation and/or financial aid to advance new, and to grow existing, industries in The Bahamas.

Sep 07, 2011

thenassauguardian