Government Urged: Release Fiscal Forecast Details

  • Fiscal projections were in jeopardy before legal challenges

  • Budget impact analysis remains a secret document

  • Transparency and accountability continue to elude us

  • Details of projections should be released

  • Actions fuel suspicion that no financial modeling done prior

 

It was recently reported that the Minister of Finance believes that the legal challenges by the web shop industry will put additional pressure on the Government’s 2018/2019 fiscal projections. This is bearing in mind that the Government had supposedly anticipated an increase in revenue of between $30 million and $40 million based on changes to the taxation system for this industry.

The Minister further suggested that a cutback in the form of more austere measures may be on the horizon should the Government be unable to meet its revenue targets. This is unacceptable; the Bahamian people should not be subject to additional hardship and suffering due to the lack of proper analysis, planning and consultation prior to the implementation of new fiscal measures by the Government.

The Government has ignored repeated calls for the release of the economic impact assessment conducted to justify the significant hike in the VAT rate, other taxes and fees. Rather, the modelling and forecasts document that was referenced remains shrouded in secrecy and away from the Bahamian people. The Government has effectively chosen to ignore the people’s demand for transparency, accountability and good governance while seeking our empathy for potentially missing their revenue targets.

We note that there was significant resistance to the proposed revenue measures in the lead up to the budget debate. The duplicitous actions of the current administration in increasing the VAT rate after opposing the implementation of this tax while in opposition has been highlighted on numerous occasions. The Government was advised that an increase in the tax rate will not necessarily translate into a corresponding increase in tax revenue with potential consequences in the form of reduced consumer spending, confidence and purchasing power. The reality is that the risk of missing revenue projections was always present prior to the legal challenges referenced by the Minister.

The adhoc policy decisions on certain tax measures fuel the suspicion that no proper financial modelling was done by the Government prior to the preparation or implementation of the national budget. We are hopeful that this is not the case and urge the Government to dispel this notion by releasing their detailed projections to the public. The revised projections will ideally factor in the purchase of the Grand Lucayan, the tax revenue forgone for breadbasket items, VAT exempt implications for insurance products and medicines, the increase in the VAT exempt minimum threshold for BPL customers and reversal of the tax treatment for owner-occupied dwellings.

In releasing the economic impact analysis, the Bahamian people will be better informed on the anticipated impact on Gross Domestic Product (GDP), unemployment, the poverty index, inflation and consequently economic growth projections. The Bahamian people are intelligent and can decipher information for themselves. This is the least that we can expect from the people’s time government.

 

Arinthia S. Komolafe

Deputy Leader, Democratic National Alliance

Government Urged: Disclose strategy for Grand Lucayan

Government Urged: Disclose strategy for Grand Lucayan

Grand Bahamians holding on to a glimmer of hope based on this resort have been placed on an emotional rollercoaster plagued with uncertainty and cloaked in political rhetoric. On the other hand, Bahamians are puzzled by the contradiction in the Government’s approach to the country’s fiscal predicament.


EU Grey List: Welcomed but Not Out of Woods

• We must look beyond December 2018
• Bahamian people deserve to know commitments made to EU
• Government must deliver on commitments
• Prudent decisions and proper consultation essential

The news that The Bahamas has been removed from the European Union’s (EU) list of non-cooperative tax jurisdictions is welcomed. According to a press release issued earlier today, The Bahamas has been moved from Annex 1 (blacklist) to Annex II (grey list) by the EU.

While this is a notable development, we are not out of the woods yet and there is much work to be done to ensure that The Bahamas is totally removed from any adverse listing published by the EU. This is bearing in mind that countries on the grey list can be moved back to the blacklist if they fail to honor their commitments.

The rationale for the addition of The Bahamas to the grey list is that commitments have been made by The Bahamas at a high political level to remedy EU concerns. It is imperative that these commitments are shared with the Bahamian people in the spirit of transparency and accountability. It is noteworthy to state that several jurisdictions have consented to the publication of their commitment letters on the EU’s website thereby providing their people with access to commitments made on their behalf.

The clock is now ticking as the December 31, 2018 deadline for delivering on our commitments to the EU is fast approaching. We are hopeful that this impending deadline will not result in rushed or imprudent decisions and the ditching of proper consultation with stakeholders and the Bahamian people. In the days ahead, the Bahamian people will be looking to the Government to lay out its comprehensive plan to ensure our removal from the EU grey list. This should include the approach to be taken in addressing the fair taxation criterion and clarify the framework for rectifying the economic substance and ring fencing issues identified.

We implore the Government to look beyond the upcoming deadline and develop a comprehensive Financial Services Growth Action Plan (FSGAP) which will reposition The Bahamas as a premier international financial centre. Our focus must extend beyond removal from blacklists and compliance with international standards to strategic planning for the creation of a thriving financial services industry. The global landscape for financial services has changed and continues to evolve; The Bahamas cannot afford to be left behind.

The international pressures we face present us with a unique opportunity to re-imagine, reform, retool and rebrand our financial services industry. We must look at the bigger picture and the Government must not be myopic in its responses. The ultimate objective must be to place the interests of the Bahamian people ahead of all other interests. We stand ready to assist the Government in a non-partisan effort in the national interest.

Arinthia S. Komolafe
Deputy Leader, Democratic National Alliance