2003 public (government) revenue was projected to be $901 million
dollars, with expenditures of $1.1 billion. Fast forwarding to 2012, if
my figures are correct, it looks like revenue was projected at $1.5
billion and expenditures at $1.7 billion.
In other words in about ten years we've seen almost a doubling of government
expenditures and a projected increase in revenue of only about 50%.
Obviously the numbers don't add up. Deficits and borrowing have been the order of the day for decades now.
the Minister of Finance recently indicated they would get serious about
cutting spending and I'm hopeful but not confident that we will see
significant reductions in government spending. The recent "uprising" at
the College of The Bahamas when
they were advised their budget would be cut is one reason why I don't
think they will materialise. Once governments grant favours to some at
the expense of "everyone", a complete economic collapse (à la Greece)
seems to be
the only way to reduce them.
The recent "debate" over budget cuts both here at home and in the US
are eye openers. Heck one US Representative indicated a 3% cut in
the US Government budget would lead to a loss of 170 million jobs (mind
you it's estimated there are only 135 million workers in the US). It was
simply an attempt to convince (read frighten) citizens that the
proposed cuts are draconian.
Meanwhile the private sector has had to cut costs where possible to stay afloat for years now.
So governments primary answer is to find more tax revenue, not significantly decrease spending.
And now the nation is told a Value Added Tax (VAT) will be introduced
in 2014 because the tax base needs to be broadened. We hear government
officials, and others, explaining that the professional classes are not
taxed so a VAT is how to do it. Of course the consumer will simply pay
more for goods and services.
In other words, those workers and citizens that have had to cut back
on their standard of living to make ends meet will have to pay even
Obviously taxes do not add value, so the only thing a value added tax
could mean is entrepreneurs create the value and governments take
I'm reminded of this quote from US Chief Justice John Marshall:
"The power to tax involves the power to destroy;...the power to destroy may defeat and render useless the power to create...."
Yours in Liberty,