The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken businessman yesterday said he was “looking for the fiscal deficit to be zero”, otherwise he would inquire what the Government has done with its Value-Added Tax (VAT) ‘revenue windfall’.

Dionisio D’Aguilar told the RoyalFidelity Bahamas Economic Outlook conference that the key issue was how the Government used its VAT revenues, as opposed to the sum collected.

“The big thing is to see if the new monies have been applied to the deficit, or will they [the Government] have blown it on pet projects,” he said during a panel discussion at the conference.

“I’m looking for the deficit to be zero and, if it’s not, where’s my money gone?”

The Government, though, has cautioned against expecting too much, too soon, in terms of VAT being able to eliminate the fiscal deficit and make inroads into the Bahamas’ $6.5 billion national debt.

Michael Halkitis, minister of state for finance, told the House of Assembly on Wednesday that the Government may be two to there years away from achieving an annual Budget surplus following VAT’s implementation on January 1 last year.

He said: “You don’t go from a deep hole to surplus in one year. It’s not as if the Government is in a balanced position. It’s not like we have this pile of VAT money and that should go straight to the debt.

“We are in a deficit position. We are in a hole, a deep hole. The VAT revenues are beginning to get us out of this hole, and we believe that if we continue to administer and improve in our administration, we will eventually get to the point where we do have a surplus. But that is, from our calculation, two or three years away.”

The private sector, though, is keen for more rapid progress, plus greater transparency and accountability over how the Government is using its VAT monies, which are expected to increase Government’s net revenues by $300-$350 million annually.

Mr D’Aguilar, meanwhile, said many Bahamians were suspicious of the proposed National Health Insurance (NHI) scheme because of the Government’s proven inability to run any business successfully.

“The biggest problem our people have with any type of programme is that the Government does not have a history of running any programme well,” he said.

“ZNS loses money, Bank of the Bahamas loses money, Bahamasair loses money, BEC loses money, Water & Sewerage loses money.”

Mr D’Aguilar said suspicions of political cronyism frequently surrounded how public corporations and agencies were run, resulting in a mistrust of the system by ordinary Bahamians.

“Everyone knows it’s going to be a disaster,” he added of NHI. “The one thing the Government of the Bahamas has done extremely well is the collection of VAT. That was well thought-out, done in consensus with the private sector, and has been a success as the tax revenues collected have demonstrated. No other tax has been collected as well.”