Budget

Budget 2019/20 – Much Ado About Nothing

  • Budget communication falls flat

  • Government has credibility deficit

  • No relief in sight for hurting masses

  • Focus on figures at the expense of Bahamians

  • Duty reductions will have minimal impact after VAT


The Minister of Finance delivered his third Budget Communication in the House of Assembly yesterday to a nation in desperate need of hope and some positive news. Once again, the Free National Movement (FNM) administration showed its lack of compassion and disconnection from the plight of the masses. The delivery of the communication was both uninspiring and underwhelming, while the extended rendition of shallow pronouncements was painful to watch.


In a communication that fell flat for most Bahamians, the government’s idea of positive news was the continuous reminder that the Value Added Tax (VAT) rate will not be increased again. In the aftermath of a 60% increase in the VAT rate in the previous year, this heartless administration expected nationwide jubilation for choosing not to worsen the financial condition of the Bahamian people.


Bahamians can now confirm that the Democratic National Alliance (DNA) was right in its assessment of the 2018/2019 budget of hardship when we stated that the government would fall short of its revenue projections and the economy would be negatively impacted. The admission by the Minister that the government fell short of its revenue target by hundreds of millions of dollars is testament to the accuracy of our prognosis a year ago.


The government is projecting that the GFS deficit for 2018/2019 will come in at $229 million dollars despite the revenue shortage as a result of spending cuts. We note that this administration was forced to admit that the Minister of Finance’s deficit forecast for the 2017/2018 fiscal year was higher by $105 million dollars. Hence, the government has a credibility deficit when it comes to projections on both revenue and expenditure.


We witnessed another episode of self-aggrandization and pats on the back by politicians who have forgotten that they are not doing taxpayers any favors but rather spending our hard-earned dollars on projects they select. The reduction in customs duties to the tune of $28 million in the face of the massive increase in taxes to the tune of $500 million last year is a slap in the face of struggling Bahamians. A closer look at the reduced tariffs and the affected items for the 2019/20 budget will show that they will have minimal impact on the finances of majority of Bahamians.


It was noted that the deficit is at its lowest in 10 years and the Minister demanded some commendation for this achievement. What he failed to mention is that 10 years ago, the government’s revenue was half (about $1.3 billion less) of what it is today, and total expenditure was $1 billion less than it is in 2019. Hence, within a decade, successive administrations have significantly increased taxes on the backs of the Bahamian people to fund their insatiable appetite for spending and wastage.


The current administration is out to lunch and oblivious to the dilemma of Bahamians challenged to make ends meet daily. They believe that eliminated tariffs on pencils, crayons and sharpeners is worthy of praise while being convinced that several Bahamians have the disposable income to embark on the purchase of new furniture and appliances. This follows a recent international report that notes that The Bahamas is the fourth most expensive nation in the world to live in. While taxes and fees have continued to rise, so have unemployment figures while the income of average Bahamians have remained the same or lowered.


The budget communication perpetuates the practice of the Progressive Liberal Party (PLP) which places the burden of taxation on the poor and the middle class. The pontification on tax fairness is disingenuous when taxes are not based on individuals’ earnings and ability to pay. The current system of governance for special interest groups will not change until there is campaign finance reform in The Bahamas. Until then, he who pays the piper will continue to call the tune and the decimation of the Bahamian middle class will not cease.


The highlight of the show that was the budget communication was the suggestion that the FNM is committed to meritocracy. This follows several conflicts of interest, failure to provide details on spending, appointment of FNM cronies to high-paying jobs, award of contracts to supporters without a transparent bidding process and political interference in government agencies among others.


The DNA will be taking a deeper dive into the numbers within the actual budget in the days ahead and provide the Bahamian people with the key themes from a budget that is anything other than the people’s budget.


Arinthia S. Komolafe

Leader

Democratic National Alliance


The “Rich People’s” Budget

Let them eat cake or salmon! After examination of the budget communication by the new Minister for Finance, Peter Turnquest on behalf of the new FNM administration it is clearly a budget which favors the rich but does very little for the small man.

In their latest campaign promise bait and switch, the FNM has moved away from reducing duties on bread basket items, and instead decided to reduce duties on “much needed” goods and foods like salmon, cakes, x-ray machines and gym equipment.

The FNM has backed away from it’s pledge to reduce Value Added Tax on core items and services. Similarly they have also backed away from their inner-city tax initiative which was supposed to be a Hallmark of their government. That promise, however, was unsustainable as suggested by the IMF and other analysts prior to the election. That did not stop the FNM from saying it because they felt they could win by telling Bahamians anything!

We are left to wonder if Minister Turnquest’s declaration of “No New Taxes” was true and sincere. At the rate at which the FNM has backed away from central themes of their 2017 campaign, we are not prepared to believe that the FNM administration will not back away from their promise of “No New Taxes” or little else it has proposed to do!

The DNA notes The FNM pledges to borrow in excess of $720 million dollars in the current fiscal cycle. $400 million will be borrowed to cover the shortfall of the 2016/2017 budget deficit of a “staggering” $500 million dollars. Additionally, $320 million dollars is expected to be borrowed for the next budget year 2017/2018! Unbelievable! Unthinkable!

The DNA believes this is too much, too soon for the forecasted borrowing estimates for the 2017/2018 fiscal year. The conventional wisdom is that if you borrow that much in advance on the expectation of expenditure, without even presenting a budget slimming programme to go along with it, you will run the risk of spending that which you forecasted to borrow and we will be back to higher debt for the foreseeable future.

This magnitude of borrowing begs obvious questions which the Minister has yet to answer. They are:-


1. Where will the money come from to finance this debt?
2. Will new forms of taxation be introduced?
3. Will the VAT rate be increased?
4 Who is waiting to finance this debt?
5. What are the proposed terms upon which this debt will be borrowed?
These must be answered, brought to parliament and debated. The Bahamian people deserve to know.

The DNA also waits patiently for the approved estimates, because, while we appreciate more invoices and receipts will be uncovered, it is our expectation that the final deficit for the 2016/2017 budget will eclipse $500 million dollars. Further, we hope that the new Minister does not transfer the accounting cost of the 2016/2017’s debt into the new 2017/2018 fiscal year. We hope the current administration will not continue this process employed by the previous PLP administration in an attempt to hide the accounting cost.

The former administration has left the country finances in a deep financial hole that we will not be able dig ourselves out of any time soon, however it must never be forgotten that it was the FNM that added to the same financial mess when they were last in office. In fact, in June 2013, the current Prime Minister who at that time was leader of the Opposition, conceded that it was the FNM that left economy and its finances in a wheel chair. Now, the current Deputy Prime Minister and minister of finance has likened the state of the country’s finances, after 5 years of PLP governance, to a house with bare cupboards. The narrative between the FNM and PLP is ominously similar. Both of them have exploded the country’s debt.The clear take away from this budget is that the FNM has turned “The People’s Time” into “Their People’s Time”. This is a budget for the rich and not the small man, or the inner city.

In summary: This new FNM administration has backed away from many of its campaign promises and commitments just weeks after winning office, giving us a better understanding that they were unaware and incapable as an Opposition Party especially with its use of the Public Accounts Committee. They never addressed core issues nor gave real solutions aside from bashing the then sitting government. They are setting themselves up to be nothing more than a care-taker government, with no real plan for the Bahamian people and, the growth and development of this country!

The DNA still stands ready to hold this government’s feet to the fire and to the promises which they made to the Bahamian people!

Chris Mortimer
DNA Deputy Leader

DNA comments on Speech from the Throne

FOR IMMEDIATE RELEASE
May 24, 2017

The Democratic National Alliance (DNA) joins all Bahamians today in congratulating the newly elected and appointed Members of Parliament who have been entrusted with the enormous responsibility of overseeing the affairs of our Commonwealth. We wish God’s speed and guidance as they begin to govern in the interest of all Bahamians.

The DNA has conducted a preliminary review of the speech from the throne as delivered by the Governor General - Her Excellency, Dame Marguerite Pindling. While it is our intention to speak in more detail on all aspects of the speech over the coming days and weeks, we offer a few of our observations on the proposed agenda of the new administration as articulated by the Governor General. Additionally, the DNA will further address the aforesaid speech and the budget communication in the days ahead with a view to contributing to the national discourse in the interest of our nation.

Good Governance platform
We commend the new government for adopting certain aspects of our Good Governance Platform as outlined in the Speech. We submit that this is a step in the right direction albeit it does not go far enough. We trust that the current government will also see the wisdom in committing to the enactment of Whistle blower’s legislation in its fight against corruption and institute a fixed date for national and local elections.

The DNA welcomes the government’s pronouncement on its plan to implement campaign finance reforms via the enactment of legislation and supporting framework. We anticipate that the Government will also commit to accompanying automation of the electoral process and voter participation for the Bahamian diaspora.

Judicial Reform
The DNA welcomes the intended reforms to the judicial system which coincides with the plans outlined in our Vision 2017. The independence of the judiciary is an important tenet of our democracy and is vital to the doctrine of separation of powers and the rule of law while instilling faith in the people regarding the administration of justice.

Grand Bahama
The DNA notes the reference to a strategic plan for Grand Bahama to boost the Grand Bahamian economy. We look forward to the Government releasing a copy of the aforementioned strategic plan with a white paper accompanying the same for the purpose of meaningful consultation with the Bahamian people.

Specific details on the anticipated or planned world class tournaments, competitions and relevant sport or industry as referenced in the Speech will be helpful in informing the public discourse on this initiative.

Further, we request that the government provide the rationale behind establishing Grand Bahama as a financial services centre and how this is expected to function alongside the already established New Providence Financial Services Centre. How will this plan fit into the remodelling and reinvention of Grand Bahama as an industrial hub?

Business, Trade & Industry
The DNA notes that the Jump Start and Fresh Start initiative commenced by the Ingraham administration was cancelled by the Christie administration. In this sense, the DNA requests the timeline for the reintroduction of this initiative and what new controls will be implemented to address the challenges experienced with the scheme during its first incarnation. Details on the amount of funds allocated for the scheme by the current Minnis administration and the proposed structure will also help in promoting transparency and accountability.

We also trust that the current Minnis administration will consider the DNA’s proposal in revisiting the policy regarding business license fees to bring relief to small-medium sized entrepreneurs (SMEs) and to aid in reviving the Bahamian economy.

The DNA agrees that the ease of doing business in The Bahamas must improve for both domestic and international participants in the Bahamian economy. Additionally, the DNA welcomes the proposed one-stop shop approach as a major stepping stone toward improving the ease of doing business and we look forward to hearing the Government’s plan inclusive of a timeline and cost of such an exercise in the upcoming budget debate.

State of the Bahamian Economy
The current state of the Bahamian economy remains one of the main topical issues within our country. The Bahamian people have endured years of negative and zero real GDP growth, a double digit unemployment rate, 25-30% youth unemployment, high national debt, high and unsustainable deficits over the last two administrations. It is no wonder that many Bahamians tuned in to the Speech to hear the Government’s plans for turning the economy around, curbing government expenditure, reforming the public service, reforming the national procurement system and diversifying the economy.

Unfortunately, many Bahamians were left disappointed based on the details provided on this important issue. The DNA awaits with great anticipation, the government’s strategic plan to turn the Bahamian economy around and get hard-working Bahamians back to work.

The DNA has proposed an innovative and 21st century plan to address our economic challenges through a combination of fiscal, monetary, economic and public service policy changes and adjustments. In the absence of such innovative and intentional reforms, it is doubtful that the country will be restored to economic growth and prosperity. It is no news that we cannot expect any positive changes within our economy by deploying the same tactics that have placed us in the precarious position that we are in today.

The DNA looks forward to continued partnership with the Government in not only identifying the challenges facing our nation, but providing viable solutions to address the same. We remain hopeful that the Government will accept our offer and proposal to do so because we are all Bahamians working for the advancement of our beloved nation towards a common loftier goal.

Christopher Mortimer
DNA Deputy Leader