|
|
|
|
Last Updated: Feb 13, 2017 - 1:45:37 AM |
Keynote Address
by
The Honourable Michael Halkitis Minister of State for Finance
Business Outlook 2014 Abaco Beach Resort September 24, 2014
Introduction
It is a pleasure to be here this morning to deliver the Keynote Address to this year’s Abaco Business Outlook Conference. The day features an excellent roster of speakers and I trust that the proceedings will provide valuable insights for all participants on the business outlook for this key part of our national economy.
All will know full well that our Government has embarked on a major structural reform of the Bahamian tax system, both in terms of modernizing the collection of existing taxes but also through the introduction of a major new source of revenue. Tax reform will be an important feature of the business environment over both the near term and going forward beyond.
The introduction of a new Value Added Tax in The Bahamas indeed represents a landmark moment in the history of our nation. Following many years of study and discussion, we are finally moving to bring our system of taxation up to the proper and appropriate standards of the 21st century such that it provides adequate resources in support of modern governance going forward.
It goes without saying that the introduction of Value Added Tax in The Bahamas next January is a major and fundamental economic and fiscal innovation that will indeed be transformative:
-
on the economic front, it is expected to lead to enhanced economic efficiency and stronger economic growth and job creation over time; and
-
on the fiscal front, within the framework of our overaching Multi-Year Fiscal Consolidation Plan featuring both enhanced revenues and sustained restraint of expenditure growth, it will lead to the steady and gradual elimination of the Government Deficit and a reduction in the burden of Government Debt.
With this as context, in my remarks this morning, I want to:
1. set the new VAT and tax reform within the context of the Government’s overarching national development plan;
2. outline the concerted efforts to reform and modernize the administration of the major, existing taxes in order to enhance revenue collections performance;
3. review the many initiatives that the Government has launched to better contain and control public expenditure;
4. provide an update on the key elements of the VAT policy and administrative framework that is featured in the VAT Act;
5. elaborate on the complementary reductions that have been announced for various tariff and excise rates; and
6. expand on the current state of preparations for the introduction of VAT in just over three month, and specifically on the work that is underway to begin the registration process for businesses that will be VAT registrants.
The Government’s National Development Plan
It is critically important to properly situate the VAT initiative in the broader context of the Government’s overall plan for national development. The plan, appropriately so, is about much more than tax reform and the introduction of a new source of taxation.
This plan offers new and innovative solutions for the wide range of economic and social challenges facing the nation. To that end, the Government has charted a course of change with the specific goals and targeted actions that it will implement over the full course of its five-year mandate. The plan is multi-faceted and it is targeted to fighting crime and bolstering national security, strengthening the economy and creating jobs, enhancing health and education and social development generally as well as promoting the further development of our Family Islands.
We fully recognize that the challenges that confront us are numerous and complex. The plan of action is commensurate with those challenges and the Government is steadfastly committed to its full implementation for the sake of a better life and future for all Bahamians.
The achievement of those objectives clearly rests on stronger economic growth going forward. To that end, the plan encompasses a variety of measures including strengthening our key tourism industry; promoting additional foreign direct investment
across the country, and particularly in Grand Bahama and the Family Islands; exploring avenues for further diversifying our economy, especially in the agricultural area through science and technology to improve our competitiveness in food production. We are also committed to further diversifying our financial services sector; the further development and expansion of our yachting and shipping registries; expanding our investments in education; and strengthening national training through the National Training Agency to establish a competency based training and job placement system that is flexible and responsive to the requirements of the workplace.
From the outset, it has been clear that the plan could not simply be fueled by spending more money. The finances of the Government need to be returned to a position of sustainability if we are to strengthen confidence in the Bahamas as an attractive and secure place for investment, not only by foreigners but by Bahamian entrepreneurs as well.
The Government has therefore been clear that it will implement priority initiatives within its plan to the extent that it can do so in a fiscally responsible manner. We have also stressed that we will strive to reform and rebuild the basic structure of the public finances such that, over time, we return them to a self- sustaining basis with no need for annual deficit financing and borrowing.
At the same time, by putting the burden of government debt on a downward path back to more desirable and appropriate levels, we will recreate the fiscal room necessary to finance the full complement of our national development plan, including economic renewal and stronger job creation. Seen in this light, fiscal reform is at the heart of the Government’s plan for national economic and social development. In turn, tax reform is a critical component of fiscal reform. These reforms are critically necessary to allow the Government to follow through in making its national development plan a reality.
For the sake of complete transparency, accountability and credibility, the details of the fiscal reform strategy have been set out in the form of a Medium-Term Fiscal Consolidation Plan through 2016/17. The plan consists of four key parts: growing the economy; restraining expenditure; enhancing revenue administration; and securing new sources of revenue.
Through this plan, and in combination with actions to strengthen economic growth, the Government is fundamentally and, in a balanced way, reforming the structure of both Recurrent and Capital Expenditure as well as the structure of Government Revenues. This will allow the Government to:
-
eliminate the unsustainable imbalance between Recurrent Expenditure and Revenue by 2015/16;
-
significantly reduce the GFS Deficit and set it on course to complete elimination; and
-
arrest the growth in the Government Debt burden and move it onto a steady downward path to more prudent and sustainable levels...
Full Speech attached
© Copyright 2014 by thebahamasweekly.com
Top of Page
|
|
|
|
