The Tribune

By SANCHESKA DORSETT

Tribune Staff Reporter

sdorsett@tribunemedia.net

FREE National Movement Deputy Leader Peter Turnquest yesterday said the Bahamian people have a “right to know” where the money from value added tax is being spent. He criticised the government for continuing to borrow without “reining in” spending.

Mr Turnquest said he shares the concern of many Bahamians who have “no idea” where the VAT money is being spent.

His comments came after Minister of State for Finance Michael Halkitis revealed on Wednesday that the government has collected $852.6 million in VAT receipts in 18 months.

Earlier this year, Mr Halkitis projected that the government would receive “just under $550m” in the first VAT fiscal year.

The government originally said it expected to collect around $300 million from VAT in the first year of implementation, however Mr Halkitis said that figure “was a conservative estimate” because the tax was new and officials “didn’t know what to expect.”

Mr Turnquest said while he understands the need for taxes, he questioned why the government continues to borrow such large sums of money, if the administration is collecting hundreds of million of dollars “off the backs of Bahamians.”

“We need to know how the money is being collected and spent, $852 million is not a small amount of money, especially when it is taken from ordinary families who worked hard for that money,” Mr Turnquest said.

“We have a fiscal problem and we understand the need for taxes but we need to know where it is going and what it is doing. The government said it was using the money to reduce the deficit, which they have done to some extent but when you consider how much we borrowed before VAT, even after collecting VAT we are still borrowing a lot of money. “So debt is continuing to rise. We just borrowed additional money for hurricane expenditure. It is a legitimate question, where is all the money they are collecting and what are we doing about controlling spending?

“I share the concern every Bahamian has because every dollar the government takes is a dollar from a mother who took it out of her budget and is unable to make her ends meet. “We deserve an explanation on how the money is being spent,” the East Grand Bahama MP said.

In May, Mr Halkitis said there is a “misconception” that VAT revenue is extra money for the government, explaining that for many years the country has been running a deficit and the money collected from VAT is being used to “fill the hole.”

“What happened is for years before VAT was introduced, we were running deficits. For example, around the height of the economic crisis, we ran a deficit of $363 million and so when we started VAT we are not starting from zero we were starting from negative,” Mr Halkitis said earlier this year.

“The year before VAT, we had a deficit of roughly $208 million, so that money is going to fill that hole. It is used to stop the bleeding. It is like when you have a boulder running down the hill and you have to first slow it down and then stop it and then push it back up.

“So we are now slowing it down and eventually we will get a balanced budget. So we are coming down from a deficit and that is where the money is going. We will eventually begin to borrow less; we forecast that in 2017/2018 we will be able to pay our bills without having to borrow. We expect to have a small surplus for the day-to-day running of the country, the first since 2006,” Mr Halkitis said.