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Last Updated: Feb 13, 2017 - 1:45:37 AM |
 Nothing has substantially changed with the financial administration of this country aside from the government taking in more money without any form of accountability and little to nothing to show for it.
The general public felt that as a result of Value Added Tax being taken into consideration, we would be significantly better off. However, the opposite is true. We are facing a downgrade from Moody’s to junk-bond status, a receding GDP along with no thorough explanation as to why?
Case in point as outlined in the IMF’s recent Article IV assessment: In, 2014 this administration doubled the average primary deficit recorded between the years 2005 to 2012 from 1.7% to 3.1%, they have got it back to 1.7% and are “projecting” to have it to under 1% in, 2016. All of this was prior to the introduction of VAT, so what this administration had done is substantially increased spending and then put VAT on our backs to cover their wastefulness, and are not telling the public they have the primary deficit percentage back under 2% and receding.
To put this more into perspective, the average primary deficit during the years 2005 to 2012 was 1.7%; it doubled in 2013-2014 prior to the VAT to some 3.1%. With revenues averaging $1.5 billion prior to VAT, and now averaging about $2.3 billion with VAT, the issue is not the percentage decrease in the primary deficit but it is the dollar amount that this administration is still spending with little to nothing to show for it. So, this administration was averaging a dollar amount, primary deficit of $50 million, prior to them coming to office the average was around $25 million, and are now back at $40 million but are pledging to get it under this amount for a balanced budget in 2017. We simply do not believe them. We simply do believe that they are taxing Bahamians more without reigning in their wastefulness in addition to not showing any fruits from this spending!
In addition to all of this, presented in this administration’s own budget communication and debate, they have promised massive spending increases, with nearly 75% of the spending in non-capital expenditure increases, with these additional pledges totalling nearly $250 million dollars. The prime minister has also stated that he will borrow some $100 million of this $250 odd amount within the first three months of this fiscal year, hopefully his last.
The IMF clearly mis-judged the budget communication, or had not had a firm handle on what was said prior to their visit at the end of March, 2016 and the budget communication delivered at the end of this fiscal year, May- let alone the “extra” pledges of the 3,000 Bahamas Electricity Corporation reconnection scheme the Cabinet announced just recently that clearly was not a part of the budget exercise.
The DNA wonders: What other extraordinary spending measures, incentives and contracts are in the works for this election season?
While the government goes on their wasteful spree, and even while reports suggest a relatively smooth implementation and an efficient VAT regime, Bahamians are still in the dark as to how the VAT regime is performing without a VAT Comptroller and with the Central Revenue Agency being a Department with no legislation supporting it. While VAT revenue over the first 12 months, at $536 million (about 6 percent of GDP), we are yet to be informed as to how this affects the revenue sensitivity and demand issues as it relates to overall revenue buoyancy in the long term.
Also, in addition to the still confusing and dark-state of the VAT regime, The Chamber of Commerce had noted their frustrations with the accuracy of the registration database, registration, filing and the overall credit system. For example, tax credits could be done more timely, in addition to this, persons that originally registered for VAT under the exempt status have found out that they are VAT liable and are being charged late fees for VAT brackets they did not sign up for knowingly.
To the overall economic landscape of The Bahamas, in the face of VAT and wasteful spending, with weaker than expected growth weighing on revenue collection and an overall lack of commitment to new investment and with investors being timid in dealing with this current administration, the IMF notes that the plan to reduce the 2015/16 fiscal deficit to 1.5 percent of GDP and to achieve a near balanced budget by 2017/18 appears too optimistic. With wasteful spending the way it is under this administration, along with little to no growth, added on to the fact that revenue enhancement measures are years off for us to see any significant impact even if they were in place today as this administration had failed on their earlier promises, we are in for another set of bleak years even after this administration is voted out of office.
The DNA has warned the Bahamian people that investors simply do not want to do business with this administration. We need change and the DNA will deliver that change.
The DNA has also committed itself to modernizing the financial management structure of the Ministry of Finance with a view in mind to taking severe measures to ensure we have personnel, tools and support given to the areas that need monitoring the most.
The DNA will further go on record and assure the public that under our administration, financial transparency covenants and laws are respected, in addition to bringing much needed light to the VAT regime and other statistics and record keeping agencies.
While we are firmly aware that we will not turn this ship fully around right away, we can assure the public that we are committed to it and not willing to promise you one thing without delivering it to you.
Youri Kemp
DNA Candidate for Garden Hills
DNA Spokesperson for the Economy and Finance
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