The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Opposition’s finance spokesman has backed calls by the International Monetary Fund (IMF) to both simplify the Bahamas’ tax structure and rein in government spending.

“I support the view that domestic taxes should be simplified, as they are not business-friendly in instances,” K P Turnquest told Tribune Business.

“Business License fees would be included in this category, where the fee is applied on top-line revenue verses after ordinary business expenses, as applied in most jurisdictions. The result is that capital is taken from the private sector at the start of the year; a critical time.”

The east Grand Bahama MP added: “I also support the call for more emphasis to be placed on reining in additional public expenditure.

“As we know, in the current mid-year Budget statement, recurrent expenditure is $200 million over-budget compared to December 2014, with $100 million said to be due to transfers from capital spending. We support the call for restraint on additional hiring and increases in wages overall.”

The IMF, in a statement on its recent Article IV consultation with the Bahamas, urged the Christie administration to place “more emphasis on spending restraint to help preserve the hard-won benefits of Value-Added Tax (VAT)”.

Among its recommendations were for the Christie administration to “review the efficiency of tax exemptions and concessions, including to the tourism sector, and to consider simplifying domestic taxes that are not business-friendly”.

The IMF also warned that the proposed National Health Insurance (NHI) scheme needed to be financially sustainable, and called on the Government to start addressing the ‘ticking time bomb’ that is the $1.5 billion unfunded public sector pension deficit.

“We support the IMF advice to further consider the funding implications of NHI on the sustainability of the plan, and the implications to the economy downstream,” said Mr Turnquest.

“The delay in the launch of the plan, then, is appropriate and we trust that the Government will then relaunch the consultation process with the relevant stakeholders and providers to ensure that the best possible plan is put forward>”

Mr Turnquest also welcomed calls for strengthening internal controls, given the several gaps noted by the Auditor General over the last few years.

“We support the critical review of all government corporations to ensure their revenues are in line with the cost to operate on a cost recovery basis,” he added.