Bahamians Under Pressure
By IANTHIA SMITH:
From as little as shelling out more money at an Automatic Teller Machine (ATM) to as high as coughing up additional thousands of dollars in stamp taxes on a dwelling home or property, beginning today, Bahamians will have to put a tighter squeeze on their wallets to keep their heads above water.
Today marks the start of the 2010/2011 fiscal period, a 12-month roadmap that ushers in a rash of budget cuts, higher taxes, a freeze on hiring and promotions and in some cases, salary decreases.
But despite the firestorm of criticism that has followed the $1.8 billion budget since its introduction in Parliament several weeks ago, Prime Minister Hubert Ingraham has maintained that it is the best the government could have done under the present economic climate.
However, the Progressive Liberal Party (PLP) would tell you an entirely different story.
The Opposition argues that a part from the global economic downturn, the government’s poor fiscal management has much to do with what the country is now up against – mounting expenses and little revenue.
"This is one of the worse (budgets) for all Bahamians. The budget communication does nothing to critically address this critical and urgent need which continues to have far reaching economic, social behavioural consequences for the people of The Bahamas," Opposition Leader Perry Christie told members of the media at the time.
"This is a tax and pain budget. It is the prime minister singing a sad story as he describes the problems, but without any ideas about how to grow us out of this crisis and without accepting any responsibility for the state we are in under his stewardship."
But according to Prime Minister Ingraham, in order to bring relief to the country, the government had to make some tough decisions and the majority of those decisions come into play today.
These include stamp tax on realty transactions that have been increased by two percentage points. Stamp tax on bank transactions have been hiked by 15 cents and the air and sea departure taxes have jumped by $5.
In the case of cruise ships, the increase takes effect October 1.
Starting today, hotel room taxes will jump by 10 per cent of the room rate, while the annual fees payable by retail banks have increased by a whopping 50 per cent.
Car licensing fees, the rates on spirit and beer manufacturing and fees under the International Business Companies Act also went up.
If all went as planned, New Providence residents would have also had to shell out money for garbage collection services beginning today.
However, negotiations for the privatisation of solid waste management stalled.
With the increase in taxes, came dips in salaries and ministerial portfolios.
Freezes were even placed on hiring and promotions in the public sector, except for essential services, like police and defence force officers, teachers and nurses.
Budget allocations for the majority of ministries and departments took a nosedive.
The government has allocated some $1.55 billion for recurrent expenditure and more than $265 million for capital expenditure.
But as bad as it might seem, the Ingraham administration is not alone in trying to restore the country’s ravaged public finances over the next 12 months.
Countries like the United States, Germany and Britain have also made drastic cuts across the board.
In an "emergency budget" Britain’s Treasury chief George Osbourne unveiled "the toughest cuts to public spending in decades, which saw welfare payments and spending programmes slashed.
Mr. Osbourne said the austerity package was necessary to make "quick cuts to crippling national debts racked up during the global financial crisis.
July 1st, 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 increased taxes Bahamas. Show all posts
Showing posts with label increased taxes Bahamas. Show all posts
Sunday, July 4, 2010
Saturday, June 12, 2010
James Smith - former minister of state for finance says Government's projections for budget year 2010-2011 'may be too optimistic'
Govt projections for budget year 'may be too optimistic'
By ALISON LOWE
Tribune Staff Reporter
alowe@tribunemedia.net:
THE GOVERNMENT'S debt-cutting and revenue-raising projections for the budget year may be too optimistic and do not take into account the possibility of a double-dip recession or an event like a major hurricane, said a former minister of state for finance.
James Smith, a senator during the former PLP administration, yesterday suggested an effective step to boost the economy which has not yet been proposed could be achieved by having the Central Bank of the Bahamas lower the prime interest rate - simultaneously lessening debt burdens for regular Bahamians and for the country's "biggest debtor", the Government.
"The prime rate in The Bahamas has not changed since February 2005 despite the fact the prime rate has been dropping across world. In the same way you go to a stimulus package to increase aggregate demand in a recession you also want to provide grease for the private sector by lowering interest rates," said Mr Smith, Chairman of CFAL.
"I think Ministry of Finance should speak to the Central Bank on monetary policy and ways it could assist us in this crisis. They tend to err on side of caution so unless you nudge them they'll not move," he added.
Speaking during the wrap-up of the Budget debate for 2010/2011, Prime Minister Hubert Ingraham said the measures it contains -- including an expenditure reduction of 2.6 per cent or four per cent in real terms, enhanced revenue collection measures and some increased taxes - are "designed and intended to correct an imbalance which left alone would create an enduring economic crisis of enormous proportions."
Having "borrowed to sustain living standards to the extent we could" the Bahamas has a "high level of debt" which is unsustainable, he has said. In his Budget presentation he said the government plans to reduce, through its budgetary measures, the country's GFS deficit from 5.7 to 3 per cent by July of 2011. Speaking on Thursday, he described the steps being taken to achieve this as "not a painless medicine" but said "the alternative is demonstrably worse", pointing to recent economic crises in Greece, Spain and other European countries.
For 2010-2011, the Government is projecting that it will cut its recurrent deficit (fixed revenues minus fixed costs) to just $62 million, compared to $259 million for 2010, a reduction of more than 76 per cent. With capital spending set to exceed capital revenues by $240 million, the Government is projecting a total deficit of $302 million in 2010-2011, compared to $514 million in 2009-2010.
Stripping out the cost of debt principal redemption for both years shows that the Government's targeted GFS fiscal deficit for 2010-2011 is $227 million, a 46.4 per cent reduction on this year's $425 million deficit. As a percentage of GDP, the target GFS deficit for 2010-2011 is 3 per cent.
Mr Smith said he believes the government is "sending the right message" to international credit rating agencies - who determine at what rate the Bahamas can borrow money on the international market - when it shows "recognition that debt and the deficit are rising too rapidly."
However, he said, he would have preferred to see "a more realistic timeline" for reduction in these figures than that proposed by the Prime Minister of "two to three years." He said that he feels it is unlikely the deficit can be reduced by $200 million in the next year unless "some external event" like the privatisation of BTC comes into play.
"By increasing a number of taxes you might really slow down the economic growth rate in the country which depends primarily on imports for its revenue base, having an unintended negative effect," he said.
Meanwhile, he said such optimistic revenue projections do not take into account the possibility that the Bahamas may see a ripple effect from the economic woes plaguing the Euro zone at present - exemplified by the Greek crisis - or the likelihood that a hurricane could hit, taking up precious resources.
June 12, 2010
tribune242
By ALISON LOWE
Tribune Staff Reporter
alowe@tribunemedia.net:
THE GOVERNMENT'S debt-cutting and revenue-raising projections for the budget year may be too optimistic and do not take into account the possibility of a double-dip recession or an event like a major hurricane, said a former minister of state for finance.
James Smith, a senator during the former PLP administration, yesterday suggested an effective step to boost the economy which has not yet been proposed could be achieved by having the Central Bank of the Bahamas lower the prime interest rate - simultaneously lessening debt burdens for regular Bahamians and for the country's "biggest debtor", the Government.
"The prime rate in The Bahamas has not changed since February 2005 despite the fact the prime rate has been dropping across world. In the same way you go to a stimulus package to increase aggregate demand in a recession you also want to provide grease for the private sector by lowering interest rates," said Mr Smith, Chairman of CFAL.
"I think Ministry of Finance should speak to the Central Bank on monetary policy and ways it could assist us in this crisis. They tend to err on side of caution so unless you nudge them they'll not move," he added.
Speaking during the wrap-up of the Budget debate for 2010/2011, Prime Minister Hubert Ingraham said the measures it contains -- including an expenditure reduction of 2.6 per cent or four per cent in real terms, enhanced revenue collection measures and some increased taxes - are "designed and intended to correct an imbalance which left alone would create an enduring economic crisis of enormous proportions."
Having "borrowed to sustain living standards to the extent we could" the Bahamas has a "high level of debt" which is unsustainable, he has said. In his Budget presentation he said the government plans to reduce, through its budgetary measures, the country's GFS deficit from 5.7 to 3 per cent by July of 2011. Speaking on Thursday, he described the steps being taken to achieve this as "not a painless medicine" but said "the alternative is demonstrably worse", pointing to recent economic crises in Greece, Spain and other European countries.
For 2010-2011, the Government is projecting that it will cut its recurrent deficit (fixed revenues minus fixed costs) to just $62 million, compared to $259 million for 2010, a reduction of more than 76 per cent. With capital spending set to exceed capital revenues by $240 million, the Government is projecting a total deficit of $302 million in 2010-2011, compared to $514 million in 2009-2010.
Stripping out the cost of debt principal redemption for both years shows that the Government's targeted GFS fiscal deficit for 2010-2011 is $227 million, a 46.4 per cent reduction on this year's $425 million deficit. As a percentage of GDP, the target GFS deficit for 2010-2011 is 3 per cent.
Mr Smith said he believes the government is "sending the right message" to international credit rating agencies - who determine at what rate the Bahamas can borrow money on the international market - when it shows "recognition that debt and the deficit are rising too rapidly."
However, he said, he would have preferred to see "a more realistic timeline" for reduction in these figures than that proposed by the Prime Minister of "two to three years." He said that he feels it is unlikely the deficit can be reduced by $200 million in the next year unless "some external event" like the privatisation of BTC comes into play.
"By increasing a number of taxes you might really slow down the economic growth rate in the country which depends primarily on imports for its revenue base, having an unintended negative effect," he said.
Meanwhile, he said such optimistic revenue projections do not take into account the possibility that the Bahamas may see a ripple effect from the economic woes plaguing the Euro zone at present - exemplified by the Greek crisis - or the likelihood that a hurricane could hit, taking up precious resources.
June 12, 2010
tribune242
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 3, 2010
Bahamas tax level remains "one of the lowest in the world" and simply "cannot cut it" in the long term, says Prime Minister Hubert Ingraham
PM: Bahamas tax level one of world's lowest
By ALISON LOWE
Tribune Staff Reporter
alowe@tribunemedia.net:
THE level of tax taken in by the government each year remains "one of the lowest in the world" and simply "cannot cut it" in the long term, the Prime Minister said yesterday, as he defended tax increases being imposed in this year's budget and warned that more substantial changes will be required in the future.
Prime Minister Hubert Ingraham said that the country's low-tax status remains the case "notwithstanding the increase in taxes" the Government is implementing to shore up its revenue this year, such as those on cars, local beer, tourism and domestic retail banks.
He said that the Government currently collects the equivalent of 18 per cent of the country's gross domestic product in tax, comparing this to the tax collected in other nations such as Singapore (23), St Lucia (29), Trinidad and Tobago (30), Jamaica (30) and Barbados (33).
"Notwithstanding the increase in taxes that we are putting in, The Bahamas has one of the lowest rates of taxation in the world. That's notwithstanding all of the islands and services we have to duplicate. You know how easy it is to run a Barbados with a similar population (size), with one island, one set of high schools, one set of primary schools, one set of roads, one set of electricity to generate?
"But while we are expensive to operate as a country, we're only getting around 18 per cent of Gross Domestic Product in tax. That is not going to cut it. That cannot cut it. We are hoping to raise that to 19.7 per cent in the coming year. That is optimistic, as I said."
Mr Ingraham complained that Bahamians "demand all of these services but are not prepared to pay the taxes" that are required to sustain them.
And in this regard, pointing to more sweeping changes to the way the government collects its revenue and from where, Mr Ingraham said that the government of The Bahamas will "one day have to be prepared to say to the public of the Bahamas that the current tax system is inequitable and unfair and do something about it."
He added that Bahamians tend to "demand all of these (government) services but are not prepared to pay the taxes."
"Barbados has excellent social statistics. But the people pay," he said.
June 03, 2010
tribune242
By ALISON LOWE
Tribune Staff Reporter
alowe@tribunemedia.net:
THE level of tax taken in by the government each year remains "one of the lowest in the world" and simply "cannot cut it" in the long term, the Prime Minister said yesterday, as he defended tax increases being imposed in this year's budget and warned that more substantial changes will be required in the future.
Prime Minister Hubert Ingraham said that the country's low-tax status remains the case "notwithstanding the increase in taxes" the Government is implementing to shore up its revenue this year, such as those on cars, local beer, tourism and domestic retail banks.
He said that the Government currently collects the equivalent of 18 per cent of the country's gross domestic product in tax, comparing this to the tax collected in other nations such as Singapore (23), St Lucia (29), Trinidad and Tobago (30), Jamaica (30) and Barbados (33).
"Notwithstanding the increase in taxes that we are putting in, The Bahamas has one of the lowest rates of taxation in the world. That's notwithstanding all of the islands and services we have to duplicate. You know how easy it is to run a Barbados with a similar population (size), with one island, one set of high schools, one set of primary schools, one set of roads, one set of electricity to generate?
"But while we are expensive to operate as a country, we're only getting around 18 per cent of Gross Domestic Product in tax. That is not going to cut it. That cannot cut it. We are hoping to raise that to 19.7 per cent in the coming year. That is optimistic, as I said."
Mr Ingraham complained that Bahamians "demand all of these services but are not prepared to pay the taxes" that are required to sustain them.
And in this regard, pointing to more sweeping changes to the way the government collects its revenue and from where, Mr Ingraham said that the government of The Bahamas will "one day have to be prepared to say to the public of the Bahamas that the current tax system is inequitable and unfair and do something about it."
He added that Bahamians tend to "demand all of these (government) services but are not prepared to pay the taxes."
"Barbados has excellent social statistics. But the people pay," he said.
June 03, 2010
tribune242
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