Office of the Leader of the Opposition on the real impact of the 2018/2019 budget
Jun 4, 2018 - 6:34:28 PM
As we prepare for the second reading of the Budget this week, it is clear that last week’s budget exercise was a disaster. It was filled with inconsistencies, rash decision making, unsubstantiated claims and questionable projections. The budget was evidence of incompetence and failure of the Ministry of Finance. It is nothing more than poor management – especially when you take a closer look at the numbers and the unjustifiable amounts borrowed over the past fiscal year.
As I foreshadowed, due to the failure of the Government to collect revenues and properly manage the economy we were all blindsided with a VAT increase to 12%. We must now all pay because the Government decided to play politics with our finances and the economy. Will they stop playing sleight of hands and engaging in a marketing exercise and admit that the real deficit for this current year is in the range of $600 Million?
All of the noted local economists and financial experts, the past few defacto Ministers of Finance and the business community, including many ardent FNM supporters, have all concluded resoundingly that the Government has gotten it all wrong. Most alarming is the government’s failure to consult and the dictatorial saddling of the economy with major tax increases with three to four weeks to adjust. This is impractical and demonstrates no appreciation for the way the private sector works. Who is advising the Ministry of Finance??
What about forward contracts of hotels and the existing inventory of wholesalers and retailers? Replacing VAT with stamp tax on real property will make businesses less likely to invest in real property. The Government has created a nightmare for businesses because of its failure to consult and plan. Having heard from every quarter and perhaps now realizing the grave mistakes in the budget, I anticipate that there will be further changes. The budget that we saw last week will not and cannot be the final budget. There will be further changes and concessions particularly in the tourism sector. This exercise is the height of incompetence.
Take a close look at the Budget and you would realise that each and every tax concession or increase is designed to benefit certain special friends. Take for example the concessions on small vehicles and hybrids. I am advised that this concession will only benefit one of the car dealers in The Bahamas who has a very close relationship with the now leadership of our country. Undoubtedly the other dealers, some of whom have provided vehicles to the Government for years on credit, have been to see the PM in a bid to keep their doors open.
Then there is the issue of VAT refunds? What is this? Why is this a line item? Why the need to change the definition of “transshipment”? Who is it to benefit? Have some friends received millions in VAT refunds against the law and legal opinion which the government is now seeking to legitimize? The Auditor General is encouraged to look into this matter.
We are concerned about the effect of the imposition of the 5% stamp tax on deposits and withdrawals at gaming houses. This will adversely affect many persons in the Family Islands who in the face of the collapse of banking services in their communities, rely on these accounts to receive cash transfers from families and friends. Instead of dealing with the return of banking services in the Family Islands, the FNM government proposes to tax the poor for their own money.
This Government gutted and shelved all of the revenue enhancement projects that the last Government left in place. These were not PLP projects but initiatives put in place for the betterment of The Bahamas and to improve public finances. The results were there and the Government was collecting an additional $25 to $30 million monthly. This was brought to an end for no reason.
Case in point, our Real Property Tax enhancement project identified over 2,000 commercial properties in New Providence alone which were not registered for real property tax. Provisions were made for these properties to be registered and taxed which conservatively would account for an additional $30 Million in taxes annually. For some reason, this Government failed to have these properties registered and taxed and now wants poor Bahamians to make up the difference and carry the burden. We must ask why these properties were not registered. Who are the owners? Who stands to benefit? At the same time the average Bahamian must pay his or her real property taxes. Is this another case of special interest forces calling the shots or just more incompetence in the Ministry of Finance?
Is this budget really about accountability in public finance or about free rides to special interests while the Bahamian worker carries the burden? How do we explain the limited funds for the Auditor General while still not advising the public on the huge lump sums paid the Ernst & Young for political audits or to foreign Queen’s Counsels in feeble attempts to score political points?
Governance and public finances are serious businesses and it is high time that the Government stop treating it like a MARKETING exercise. There is simply too much is at stake!
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