The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Opposition's finance spokesman yesterday slammed the Government for racing "to impose additional taxes and further starve capital works that could spur the economy".

Chester Cooper, also the Progressive Liberal Party's (PLP) deputy leader, also questioned why the Government was focused only on taxing the winnings of Bahamian web shop patrons but neglecting to do the same with foreign casino gamblers.

Responding to the Fiscal Strategy Report, which was tabled in the House of Assembly on Wednesday, Mr Cooper said he was unable to "identify anything that defines a clear strategy for growth" despite projections that the Bahamian economy's real gross domestic product (GDP) will expand by 8.5 percent in 2022 as tourism and the world rebound from COVID-19.

"What I do see is an administration that once again runs to impose additional taxes on the Bahamian people and further starve capital works that could spur the economy," the Opposition's deputy leader said.

“The administration that railed against Value-Added Tax (VAT), then raised it, is now looking to a legalised gaming industry it opposed to shore up its fiscal position.” Mr Cooper added that it was hypocritical for the Government to tax only Bahamian gamblers' winnings but not those of foreign casino patrons.

Senator Kwasi Thompson, speaking in the Senate on Wednesday, unveiled ambitions to cut the Government's capital spending by $100m over the next six months to end-June after COVID-19's negative impact on the Budget's revenue and expenditure estimates proved greater than initially anticipated.

This will reduce the $515.5m in capital expenditure, as set out in the May Budget, by almost 20 percent and thus sharply reduce the funding available for public infrastructure and other projects that the Government has been relying upon to mitigate a little of the pandemic's economic devastation. However, the administration said "priority projects" will continue.

Mr Thompson also confirmed that the Government plans to finally implement the long-anticipated levy on gaming patron winnings from New Year's Day onwards.

"To help counter the revenue losses, starting on January 1, 2021, the Government intends to implement the Gaming tax on winnings, passed in the House of Assembly in 2019 as part of the Gaming House Operator Amendment Regulations," he revealed.

The new winnings tax is projected to generate between $10m-$15m annually in extra revenue for the Public Treasury. While a relatively small sum in the overall fiscal scheme of things, it will certainly shrink gamblers' winnings at a time when they will be hoping to land every cent possible due to COVID-19 related high unemployment and income cuts.

The new winnings tax will see five percent paid on winnings up to $1,000, and 7.5 percent on anything greater than $1,000. Dionisio D’Aguilar, minister of tourism and aviation, said previously that just 45 percent of web shop gaming activities will attract the new patron “winnings” tax with online casino spins remaining untouched “for now”.

The minister said the comparable winnings tax rates in Jamaica and Barbados are 15 percent and 20 percent, respectively. In the US, he added that the federal tax rate was 25 percent, with state and local taxes on top of that.

However, Mr Cooper added: “That the Government is still talking of cutting expenses and putting finances in order nine months into the pandemic is worrisome. This administration also takes the hypocritical position of wanting to cut $100m in spending while asking Bahamians to pay more.”

“Bahamians will now also have to change the way their finances are budgeted as they brace for not only an increase in the rates they pay for water, but the frequency at which the bills come. Increasing fares at Bahamasair will also hurt Family Island residents and impact tourists who wish to visit the Family Islands.”

Suggesting that he already lacked confidence in the Fiscal Strategy Report's projections, given that its release was nearly a month late, Mr Cooper said: “The Government is looking to January to revise its projections. However, it is unclear what the two additional weeks will tell them that they don’t already know.

“I again call on the Government to establish a debt committee with private sector contributors to manage, renegotiate and restructure debt to create savings and head room in the short term.

“I also call for a detailed accounting of the affairs of the National Insurance Board as to whether the Government has funded its share of the unemployment assistance via NIB or whether they are borrowing from the social security system.”

Mr Cooper also said he needs “proof” as to how the National Infrastructure Fund unveiled by Mr Thompson will be implemented, and added: "There is curiously no update on the status of the Grand Lucayan sale outside of the chairman who negotiated the deal and the minister of tourism bantering in the press about how bad the deal may actually be.

“Meantime, our debt-to-GDP ratio is approaching 100 percent and the deficit projections will be moot in short order. Beyond Dorian and beyond the pandemic, there remains deep concern about the competency of our political leadership at this time.”