'Taxes hitting investor confidence'
By INDERIA SAUNDERS
Guardian Business Reporter
inderia@nasguard.com:
The Nassau Institute is pressing government to accept investor confidence may be eroded because of recent changes to public policies that have resulted in higher taxes for the business community.
It's among the most recent commentaries put forth by the group that advocates a free market Bahamas.
While the institute agrees that the U.S. economic downturn has serious consequences for The Bahamas, it believes there are things that can be done to help inject some enthusiasm into the entrepreneurial class-and introducing new taxes is not one of them.
"A government should not be destabilizing the business community with excessive taxation nor blindsiding them with rule/regulation changes that do not seem to be well thought out,"said a statement from the group."Yet The Bahamas economy has certainly had an abundance of new taxation and regulation in recent months.
"The government, while finally realizing their profligate borrowing and spending must be brought under control. It should also accept that investor confidence is rattled when they are not sure what public policies to expect next. So there is a delicate balance between"reasonable"taxes and rules/regulations and over taxing and over burdensome rules/regulations."
According to the institute, the public sector is now beginning to experience the devastating effects of these very tough economic times that the private sector has been under for two years now, and there are no easy political answers. It points to a recent article written by Dr. Robert Higgs, an economist, who asserts genuine economic recovery requires a substantial reduction of government expenditure, taxes and regulations, along with a credible government commitment to stay this less burdensome course.
The columnist believes it would give private entrepreneurs the confidence and time to generate prosperity; however, he said that anemic private employment tempts politicians to intervene even more in the economy, which heightens the uncertainty and discouraging investors further in a vicious cycle.
It's something the Nassau Institute agrees with fully.
"Recovery depends on private sector growth,"it said,"and shrinking the size of a government(expenditure, borrowing, taxes, regulation)that is now beyond the capacity of the private sector to support."
8/16/2010
thenassauguardian
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 taxes Bahamas. Show all posts
Showing posts with label taxes Bahamas. Show all posts
Thursday, August 19, 2010
Sunday, July 4, 2010
Bahamas Government 2010/2011 Budget: Bahamians Under Pressure
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
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
Thursday, June 10, 2010
Bahamas 2010/2011 Budget Under Fire
Budget Backlash
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
jonesbahamas:
The widely unpopular 2010/2011 Budget came under fire Monday from one of the nation’s most prominent contractors and a political party leader, who both unleashed a perfect storm of criticism against the fiscal plan.
For a nation desperate for an economic lifeline, President of the Bahamian Contractors Association (BCA) President Stephen Wrinkle said this budget offered little solace.
He argued that the proposed budgetary initiatives would in fact send more workers to a growing unemployment line.
"I’m a builder and a developer and in my company, like every other company in The Bahamas today, I think everybody took pencil to paper in this last week and looked at what they can do without and who they can do without and we’re making our cuts," he said.
"The people that we were keeping because they were good staff, maybe we have to let them go now because we don’t have the workload to sustain it. We’ve been sustaining it for a year to a year-and-a-half in our industry anyway and most contractors have reached the point where unless they’ve got work in hand they are cutting back because they just can’t handle those carrying charges any longer."
Perhaps more importantly, Bahamas Democratic Movement (BDM) Leader Cassius Stuart, who is also a business consultant, said the budget had more to do with infrastructure than investing in human capital.
Both men were guests on the Love 97 weekly talk show, On Point, with hosts Rogan Smith and Tosheena Robinson-Blair.
"We are borrowing for capital development. What is frightening, though, is that we are putting the education of our people, the development of our human capital on the altar. We are sacrificing it on the altar of capital development," he said.
"How could we, on the one hand, cut expenditure for education . . . but increase capital developments for roads and other projects? It doesn’t make any sense because the number one engine in an economy is its people. People earn revenue. If the people are not being invested in or developed we’ll find ourselves fighting in the public and private sectors for more productivity from people."
He continued: "The government cut subsidies for the private schools by 20 per cent, which means that private schools will be forced to increase school fees. So now those who have children in private schools who can’t meet those [fee payments] will have to pull their kids out and put them in public schools. The public schools are already overcrowded, so where you currently have 30 or 40 students in a class in the public school, that will be increased to about 50 students."
Mr. Wrinkle said the "ugliest part of this budget" is the fact that the tax burden will continue to be placed on the only economic engine that the country has – the business community.
"We cannot continue to place the yolk of the burden on the business community without providing some incentive for growth," he said. "Our GDP is projected to shrink this year. The entire economy is in a recessionary mode, yet there’s been an increased tax burden on all aspects of business, whether it be an increase in stamp duty on legal transactions or NIB contributions for payrolls or business licence fees."
"The Industries Act was a real incentive that I think most Bahamians assumed would be a continuing incentive that would be available for manufacturing and when that was literally pulled out from underneath us with the stroke of a pen by one individual I think it sent a clear indication of how our country is governed."
Mr. Wrinkle said the business community now finds itself in a very difficult situation in very trying times.
"We’re now going to have to look at ways in which we can change our approach to not only make ends meet, but to make progress. With a shrinking economy, shrinking productivity, a shrinking market, we’ve got to offer some more growth incentive. Otherwise, all we’re doing is putting more plough on the horses and pulling it and at some point the horse is going to get tired and fall down," he said.
"I appreciate that there are only so many revenue streams that we have at the moment from which to draw. But, I am deeply disturbed that we are digging deeply at the crucial aspects of survival for our economic engine – the tourism sector: the room taxes have been increased; the departure taxes have been increased."
Mr. Wrinkle also expressed disappointment that the government does not consult the private industry.
"I think that is a tremendous loss, because you have experts in virtually every field of the budget readily available and willing to contribute to the management of the government, but we’ve got a government that holds its cards closer than Kenny Rogers did in Five Card Stud and they just don’t share information; they don’t share responsibilities or anything that they don’t have to share," he said.
Mr. Stuart agreed. He said the government should have consulted more with the relevant stakeholders.
Prime Minister Hubert Ingraham, during his budget communication, announced a number of budget cuts and tax hikes. He immediately raised the duty rates on car imports – a move that immediately sparked backlash from car dealers in the country. Many feared that their businesses would go belly up in the coming months.
A week later, after consulting with the dealers, the prime minister made several adjustments to the tax rates.
"The prime minister now finds himself, after the fact, coming to the car dealers after he discovers exactly what they are experiencing. Then he makes decisions based on what he finds. He should have just consulted with them in the first place, and by extension consulted with the mail boat operators and all of the stakeholders in society to find out what shortfalls they are experiencing" Mr. Stuart said.
The BDM leader called the budget "scary" and said for years he has been calling on the government to tighten up on spending.
"In the good times our government refused to do that. We have to be fiscally responsible and economically prudent. When things were good we were spending a lot, almost as if we were never going to reach this day. Now that we’re here the government has been forced to cut back on a lot of things and it’s needed. We now find ourselves in a place where we’re trying to figure out how we’re going to cover our costs and cover the overhead that the government has," he said.
Mr. Stuart said The Bahamas has not experienced any new growth in its industries, but has experienced a "significant" decline.
"Many small businesses, particularly in the manufacturing sector, have either shut down or downsized due to overhead costs. One of the many overhead costs that small businesses have been affected by is the increase in BEC (Bahamas Electricity Corporation) utility rates. It’s killing them," he said.
"There is a plan on the table to again increase that rate. On top of that we’re saying we want to increase National Insurance contribution rates by one per cent. Most companies are now looking through their books to see who they can let go because of the increase in overhead."
Mr. Wrinkle agreed.
He said the government has again "missed an opportunity to provide incentives for growth because without growth in the business sector, we’re not really going to climb out of this; we’re just making more demands."
"When you take away the concessions that manufacturers have, like the people that make the windows, the doors, the hurricane shutters and a myriad of consumable items, we’ve got chemical companies that make soaps – all of these things that are consumed here that save us from exporting our U.S. dollars and employ people keep people employed – it affects them," he said.
"It isn’t like the construction sector where I may have 130 employees this month, but next month I may have 50 because when our job is finished I have to let them go. When you’re building a manufacturing company and you start off with four employees, next year you’ve got six and then eight and then 12 and it’s long term. I really think this one is going to come back to bite [the government] because you can’t tell people that you want to produce Bahamian entrepreneurs and businessmen and then in a stroke of a pen you pull the rug out underneath them."
Mr. Wrinkle said he believes there is a serious disconnect between the politicians and businessmen in the country. He said while incentives for growth d not necessarily have to be tied to a budget, they should have been included.
"The fact that we don’t have adequate incentives in place is reflected in the way they address the budget. They have not looked outside the envelope of revenue stream. It appears that they had a list of the revenues and they went down with a pencil and ticked off which ones they thought they could increase and generate more revenue stream from the taxes," he said.
June 9, 2010
jonesbahamas
Wednesday, June 9, 2004
The Bahamas Government Warned Against Borrowing to Balance the Country's National Budget
The Bahamas government may face a fiscal crisis in the coming years if it continues to borrow at the rate the country has been borrowing at over the years
Governor And Minister At Odds
09/06/2004
Some members of the Cabinet are reportedly peeved over recent remarks made by Central Bank Governor Julian Francis, who warned the government against borrowing to balance the budget.
When asked on Tuesday what he made of Mr. Francis’ warning, Minister of State for Finance James Smith said, “I think the governor should stick to monetary policy like all former governors did. The comments on fiscal policy are not sometimes useful, but I’ll limit my comments to that for the time being.”
Mr. Francis also recently suggested that Bahamians should be made to pay higher taxes, although he stressed that it was not his intention to put himself at odds with the government.
The governor said that it is the role of the Central Bank to be a policeman on these kinds of issues that also impact the development of the monetary sector.
He indicated that the government may face a fiscal crisis in the coming years if it continues to borrow at the rate the country has been borrowing at over the years.
According to the Estimates of Revenue and Expenditure, the government expects proceeds from borrowings to total $260,277,287 to fund the 2004/2005-budget shortfall.
This level of borrowing represents $60,921,40 more than what was borrowed this fiscal year. This comes as the government continues to face warnings about the increasing national debt, which presently stands at around $2.4 billion.
The funds borrowed will be used to help cover the projected GFS deficit of $164 million, according to government officials.
In 2001/2002, the government borrowed $207,085,781; in 2002/2003, it borrowed $219,195,153; and in 2003/2004, the figure is estimated to be $199,355,879.
But Minister Smith said the government expects that it will actually have to do real borrowing of $176 million.
“I should point out that $90 million of [the $260 million figure] are loans that have already been committed for projects in the pipeline,” he told the Journal Tuesday.
“For instance, the IDB road project, which is about $40 million, is included in that. So the actual borrowing needs for 2004/2005 is really about $176 million.
“That’s the amount that we will probably have to go to market for, either locally or abroad, but that decision will be made later on in the year as we see how the revenue performs. I should also point out that these are all projections or estimates. If we perform much better on revenue or if we hold the line on expenditure, then surely we would have a reduced need for borrowing on the recurrent side.”
Prime Minister Perry Christie explained last Wednesday that there is no need for alarm regarding the size of the national debt, given that most of it is held domestically.
On Sunday, Governor Francis, who was a guest on the Love 97 programme “Jones and Company” said, “We can’t continue to add to the national debt indefinitely and that’s really the fundamental point that I’m trying to make.”
When asked whether this figure of over $260 million is significant, Parliamentary Secretary in the Ministry of Finance Michael Halkitis said that, “It is not insignificant.”
He added, “We have to keep things running. There’s a lot to do, especially capital works in the Family Islands. But we don’t believe there is any cause for alarm.”
Mr. Halkitis said the government is banking on an economic turnaround before the end of the upcoming fiscal year.
“We expect a lower shortfall the next year,” he said, indicating that borrowing should be substantially lower in 2005/2006.
Monday, June 7, 2004
The Bahamas Central Bank Governor, Julian Francis Contradicts Prime Minister Perry Christie on the Amount of the Nation's National Debt
The Central Bank Governor said that The Bahamas national debt is now around $2.4 billion, which is 42 percent of GDP. But last week, the Prime Minister said the debt was just under 40 percent of GDP
The Governor of the Central Bank of The Bahamas Warns Also that The Bahamian Government Must Prevent A Fiscal Crisis Later - By The Containment of The Country's National Debt Now
Bahamas Debt Warning Issued
By Candia Dames
Journal Staff Writer
Nassau, The Bahamas
06/07/04
Governor of the Central Bank Julian Francis on Sunday contradicted Prime Minister Perry Christie by revealing a level of debt that is higher than what the nation’s leader pointed to during the budget debate last week.
Mr. Francis also warned that the government must move now to contain the national debt to prevent a fiscal crisis in the future.
“We can’t continue to add to the national debt indefinitely,” said Mr. Francis, who was a guest on the Radio Love 97 Programme “Jones and Company”.
Mr. Francis said that the national debt is now around $2.4 billion, which is 42 percent of GDP. But last week, the Prime Minister said the debt was just under 40 percent of GDP.
Countries that go beyond the 40 percent mark are considered to be entering the danger zone in terms of fiscal management.
Mr. Francis said, “So you can see, we’re already marginally above that number at 42 percent. That doesn’t mean that all of a sudden we are bankrupt over night or anything like that, but it does mean that you don’t want to go much further than this.”
He pointed out that since 1984, the national debt has increased from 25 percent of GDP to the present figure of 42 percent. This increase spanned three different administrations, he reminded.
“There is a tendency on the part of our country to accumulate debt in order to balance the budget of the government and what I am saying as the spokesperson for the Central Bank of The Bahamas is that this is getting to the point where we should not see this as a continuing option,” said the governor, who stressed that he was not attempting to create alarm over the situation.
He agreed with the Prime Minister that the national debt is less of a concern because most of the debt is domestic.
“I accept that idea,” Mr. Francis said. “It would be of a much more important concern if it were substantially in foreign currency.”
With the budget debate ongoing, there has been much talk about the national debt and the projected deficit of $164 million.
“The fact that there is a deficit means that the government has to borrow to fund that deficit and any borrowings by the government have to be paid back at some point,” Mr. Francis said.
“What I am saying is that there is a point where we need as a people to recognize the fact that we’ve probably reached a level of borrowing that should not be too easily exceeded, except during very, very important emergencies,” he added.
While on the Sunday programme, Mr. Francis again highlighted the need for Bahamians to pay higher taxes.
It prompted the show’s host, Wendall Jones, to ask, “Do you think that it is proper for the Governor of the Central Bank to be making statements about the need to have an increase in taxes at a time when the Prime Minister and Minister of Finance has introduced a budget and has said that he is not going to increase taxes? Isn’t that walking out of step with the Government of The Bahamas?”
Mr. Francis responded, “Well, no. I don’t think so and I am sure that the government would agree with me on this. The role of the Central Bank, which is an entirely professional institute, is to be a kind of monitor, in a way, almost a police on these kinds of issues.”
He added, “I have not sought and I don’t think that it is appropriate in fact to put myself at odds with the government on these kinds of issues, but it certainly does not prevent me – and I think that we have to be extremely careful about that. If we get to the point where there can only be one view expressed, then I think it changes a bit the character of our country.”
Mr. Francis said his intension is not to criticize the government, but to sensitise Bahamians to the fact that there is no such thing as “a free lunch.”
“If we would like to have additional roads, hospital and schools,” he said, “we have got to be ready to pay for that.”
While expressing the need for a higher level of taxation, Mr. Francis also applauded the government’s efforts to improve its system of tax collection.
“You’ve got to collect what you can,” he said. “Don’t misunderstand me all. I have absolutely nothing at all to say [against] the idea of being more effective in collecting taxes. I think that is absolutely correct, but I don’t think that will cover the deficit.”
Thursday, May 27, 2004
Bahamian Taxpayers Urged to Meet Their Tax Obligations
The monies raised from taxes in The Bahamas are required to meet essential expenditures which are also approved by the Bahamian legislature
PM Pleads To Taxpayers
By Macushla N. Pinder
Nassau, The Bahamas
Journal Staff Writer
05/27/04
In an impassioned plea, Prime Minister Perry Christie on Wednesday begged Bahamian taxpayers to meet their tax obligations in a timely manner.
“The taxes levied in The Bahamas are in accordance with the laws passed by this legislature, “ Mr. Christie pointed out, while making his Budget Communication to Parliament.
He said, “The monies raised are required to meet essential expenditures which are also approved by this legislature. We have an open and transparent budgetary system and the purposes of taxation are known.”
The 2004/2005 budget projects total expenditure of $1.324 billion and total revenue of $1.063 billion.
Mr. Christie – in an unprecedented move – departed from the custom of lengthy and involved reports on budgetary allocations, giving a brief overview of his government’s spending plan.
It was the shortest Budget Communication in the post-Independence Bahamas.
About an hour and 20 minutes after he started his much-anticipated communication, Mr. Christie, who is also Minster of Finance, ended by declaring that, “The 2004/2005 budget and the economic prospects on which it is based, represent yet another landmark in my government’s commitment to the interests of the Bahamian people.”
As expected, the country’s social sector – education and training, health, housing, social services and youth development – will receive a huge chunk of the government’s $954 million 2004/2005 recurrent expenditure, a figure totaling $428 million or 45 percent.
Mr. Christie further revealed that almost 20 percent of the recurrent expenditure would be spent on national security, including the police and defence forces, judicial and legal affairs.
Some $65 million, he said, will go towards infrastructure like works and transport.
Another $100 million will be spent on economic services, including tourism, trade and agriculture and fisheries; while $173 million has been allocated to administrative services like foreign affairs, public service, finance and local government.
According to Mr. Christie, another $500,000 has been earmarked for consultancy services for, amongst other things, planning the development of Clifton Cay National Park.
“The consultancy will provide an outline of how the Park should be developed and laid out so as to maximize public benefit from it,” he said. “In this regard, it is envisaged that the Park would provide a facility which would be of enjoyment to Bahamians as well as an attractive enhancement to the cultural experience of our visitors.”
There is also provision of $1 million for interest payment on the bonds that will be issued for the purchase of the Park.
“I am sure that the Bahamian public appreciates that while each priority is of equal weight, an appropriate balance must be maintained in allocating the increasing flows of resources between them in the coming years,” he said.
“This will involve some degree of patience because not everything can be achieved or accomplished in one single year. The overarching consideration, however, is that all of these priorities be steadily and concurrently addressed as the flow of budgetary resources intensifies, not from increases in taxation, but rather from the strengthening of the economy arising form this government’s policies and from firmer and more efficient revenue administration.”
During his address, the Prime Minister also unveiled a package of measures that are sure to cause certain sectors of the Bahamian population to breathe a collective sigh of relief.
Among these are the removal of customs duties and stamp duties on imports from building materials used by private schools.
According to the Prime Minister, the new fiscal plan positions The Bahamas to take advantage of the country’s “imminent surge in economic performance” like that provided by Kerzner International’s Phase III $1 billion project.
He said it is this economic stability allied with political maturity that will make the country’s economy a magnet for investments.
Mr. Christie added that while geopolitical uncertainties like the continued surge in oil prices could result in early increases in interest rates, these uncertainties would have “diminishing implications as (economic) growth becomes firmly entrenched.”
“There is one factor working strongly to our advantage, and that is, the sizeable depreciation in the value of the United States dollar that has occurred since 2002 as a result of the expanding record-level Federal budget deficit and shortfalls on the US trade account,” Mr. Christie said.
“As these imbalances persist, the dollar is expected to remain weak in the year ahead, making dollar priced vacation destinations such as The Bahamas more affordable for people from North America, Europe and Asia.”
While on his feet, the nation’s chief also reiterated that the over-riding priorities for the economy, fiscal and non-fiscal, are to generate enough quality employment opportunities for all Bahamians.
“Our goals are clear-cut and unambiguous…” he said.
“Simply stated, they are to maximize the job creation potential of the Bahamian economy by strengthening the key sectors and encouraging the highest possible levels of employment-generating investment; accelerate the social advancement and inclusion of all members of society; ensure that every major settlement in The Bahamas participates in national prosperity and advancement and raise standards of delivery of public services so as to get the best possible value for the taxpayers’ dollar.”
As is customary, many Bahamians were drawn to the House of Assembly’s gallery to hear the budget communication first hand.
Among them were a key fiscal architect, Minister of State for Finance, Senator James Smith; former PLP Cabinet Minister Paul Adderley; government advisor Sean McWeeney; PLP Chairman Raynard Rigby; various FNM senators, including Tanya McCartney and Desmond Bannister, and other citizens.
The Bahamas 2004/2005 National Budget Draws Criticisms, and Praise
National Budget Debate in Parliament, The Bahamas
New Budget Draws Criticisms; Praise
BY ROGAN M. SMITH
Nassau, The Bahamas
Journal Staff Writer
05/27/04
Some opposition Members of Parliament on Wednesday called the government’s 2004/2005 budget a “sham” that is loaded with hidden taxes and too many unrealistic expectations.
But at least two Independent Members of Parliament pointed to positives in the new budget.
Their reaction came shortly after Prime Minister and Minister of Finance Perry Christie unveiled his government’s new spending plan in a packed House of Assembly.
Brent Symonette, the Member of Parliament for Montagu and Official Opposition Whip, noted that despite assurances from the Prime Minister that there are no new taxes, there are plans to increase certain fees and implement an airport user fee.
Mr. Christie revealed that increases in bank licence fees will provide $3.5 million; and he revealed the plan to put in place the airport user fee. Revenue collected for this fee will be used to upgrade security at ports and airports, he indicated.
Mr. Symonette said facility fees are just another way of saying taxes.
“It leaves a lot wide open,” he said. “He (the Prime Minister) talks about coming back later to bring in further increases in fees and taxes. This indicates on cursory reading of it, that this budget is a sham just to fulfill the legal requirements.
“They say if the economy does not rebound the way they intend it to- they will bring in new taxes and whatever are necessary to fund the government’s expenditure.”
Mr. Symonette said the budget is not very specific, and strikingly resembles last year’s budget in that it makes promises that never seem to materialize.
“There are many ifs in the budget; if the economy continues to grow; if these developments come off,” he said. “To pin this budget on that is reckless, bearing in mind he had to admit there was some $50-odd million in flight oversight regulations that he put in the budget that didn’t materialize last year; plus the sale of Bahamas Telecommunications Company which did not materialize shows that there has been some reckless budgeting, and it’s continued in this budget.”
Leader of the Official Opposition Alvin Smith added, “Rhetoric and talk have become the trademark of the Progressive Liberal Party government.”
Mr. Smith said he is disappointed that the help and hope that the PLP administration promised back in 2002 has not yet been delivered to the Bahamian people.
He added that he expected the Ministry of Social Services’ budget to increase by a greater amount, since there are quite a number of persons on the Family Islands who need the government’s assistance.
“I expected more reductions in taxes, or elimination in taxes as it relates to duties or stamp taxes on some more basic items,” Mr. Smith added. “There are only three items on the list, ink for computers, musical items, and customs duty and stamp tax for building materials, but only for private schools.
“I thought the government would have looked into some other areas. I particularly thought that this year the government would have reinstated that programme we had when we eliminated taxes on building materials for most of the Family Islands. There are too many unrealistic promises.”
Independent Bamboo Town MP Tennyson Wells said the prime minister seems overly optimistic and suggested that he should have been more cautious.
Saying no new taxes and no increase in taxes is simply a play on words, he said.
But Mr. Wells indicated that he was generally pleased with the spending plan the prime minister presented.
Another independent Member of the Parliament, meanwhile, praised the budget.
MP for St. Margaret Pierre Dupuch said that although he did not have enough time to study the budget communication, he thought the it was quite “innovative.”
“I was very impressed with several things,” Mr. Dupuch said. “The first was that he was not increasing taxes and that plans were underway to increase revenue by increasing the efficiency of the government and the tax agencies. I think that’s very important.
“He said that they were going to start an intensive training programme to prepare Bahamians to face the various challenges that will be coming, and the various job opportunities that will be available. That is one of the things that is very seriously needed in this country because we have lost track of a lot of training.”
Subscribe to:
Posts (Atom)