The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman yesterday described the projected $550 million GFS fiscal deficit for 2012-2013 as "cause for concern", given the already high national debt, and urged the Ministry of Finance to employ "more creative private sector-style thinking".

Chester Cooper said that just reducing the planned $1.8 billion public spending for 2012-2013 by 7.5 per cent would have freed up $135 million for use in paying down the national debt, aiding small and medium-sized businesses or building more schools and hospitals.

In a statement issued yesterday, Mr Cooper said: "The projected GFS budget deficit of $550 million, which is an increase over the reported $504 million for the prior period, is cause for concern given the need to curb the National Debt.

"Successive Governments have, in effect, 'borrowed to pay the light bills', and this does not bode well for the future of the economy. In these uncertain economic times, the Government must lead by example and do a better job of living within its means."

He added: "The budgeting process is undoubtedly fraught with complexity, given commitments from prior periods as well as servicing of existing debt commitments. However, the Ministry of Finance must employ more 'ground-up' creative private sector-style thinking to increase revenues, slash expenses, eliminate waste and create greater administrative efficiencies.

"In simplistic terms, with a total expenditure of $1.8 billion, a reduction by a mere 7.5 per cent would free up in excess of $135 million to allocate to debt reduction, or to build schools, hospital and support the development of SMEs."

Calling on the Government "to exercise fiscal prudence and resist the temptation to over-spend", as often happened in post-election periods, Mr Cooper added: "These continue to be extraordinary economic times that require bold, creative and extraordinary solutions.

"We should remain cognisant of the recent downgrades of the Bahamas sovereign rating by international agencies. Any further slide will make it more difficult and more expensive for the Bahamas to borrow, and potentially make us a less attractive jurisdiction to do business from an international perspective."

Mr Cooper backed the Government's top rate Stamp Duty cut and $50,000 real property tax cap, together with cuts in Grand Bahama's hotel occupancy tax cuts. He also praised the post of the minister of state for investments, and the reinstatement of duty exemptions for Exuma.

"We welcome the new proposed pension legislation, which is long overdue,"the BCCEC chairman said. "Whilst we welcome it as an initiative to administer and regulate pensions for the protection of employees, I would be concerned about any provision that would allow early access to pension savings.

"In a climate where less than 25 per cent of workers have private pension schemes and savings, and with a citizenry with poor savings habits, dialogue on mandatory pension savings would be welcomed for the enhancement of the standard of living for individuals, and a much-needed boost to the capital markets of the Bahamas."

And he added: "Expansion of the economy is key to increasing overall revenues. However, when it comes to the fundamentals of revenue collection, we cannot expect different results by consistently tinkering here and there with customs duties and real property taxes.

"We are supportive of the Governments intention to move to a more progressive alternative form of taxation like VAT that improves the efficiency of collection, reduces leakages, and broadens the tax base to include services that are now exempt."