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