The Tribune

The Christie administration’s much-trumpeted tax crackdown has exposed its “desperation” over the strained fiscal position, the Democratic National Alliance’s (DNA) leader yesterday charging: “The Government is broke.”

Branville McCartney told Tribune Business that no government, faced with a general election that is just six months away, would be talking publicly about extracting more taxes from individual Bahamians and businesses unless the public finances were “in dire straits”.

Arguing that the clampdown on major tax defaulters and delinquents was something successive administrations should have done years ago, Mr McCartney said the Christie administration had again waited “until the gun is pointed at them” to act.

The DNA leader, in common with many sceptical Bahamians, also questioned whether the Department of Inland Revenue would act equitably and fairly in its compliance drive, and also target defaulters with the ‘right’ family and political connections.

“The Government has gone out to do what it should have been doing from day one; collecting due taxes,” Mr McCartney told Tribune Business.

“They want to hit 600 business owners and 5,000 property owners, but the reality is this is what they ought to have been doing. The fact they’re saying they are having a tax crackdown now shows the Government has been delinquent in collection; completely delinquent.”

The Ministry of Finance on Sunday night unveiled its plans to target 600 businesses, and 5,000 property owners, in the first phase of an enforcement/compliance offensive that is designed to yield an extra $40-$80 million for the Public Treasury within six to 12 months.

The targeted businesses, said to represent 5 per cent of all licensed companies in the Bahamas, are those identified by the Ministry of Finance/Inland Revenue as having “the largest apparent discrepancies” between their Business License payments, Value-Added Tax (VAT) filings and Customs reports.

The Government will also send “courier” demands for extra real property tax payments to 5,000 homeowners in wealthy and upper middle class communities, who it believes are “under-paying” their due liabilities for a variety of reasons.

“It tells you it’s almost to the extent and point of desperation. The Government is broke; it has no money,” Mr McCartney told Tribune Business of the Government’s tax crackdown.

“No party in government, six months out from an election, will be speaking about collecting taxes at this stage. No party would think about talking taxes, collecting taxes from its citizens, six months out. That tells you what a desperate state our economy and the Government’s finances are in.”

While there is no evidence that the Government is “broke”, in the sense that it is unable to pay its recurrent bills, Tribune Business has heard repeated talk of delayed payments and cash flow difficulties in relation to the public sector.

Mr McCartney, meanwhile, added that the tax crackdown had fuelled further questions about the fate of the $852 million in VAT revenues that the Government has extracted from Bahamian consumers and businesses over the past 18 months.

Pointing to the fraud, abuse and wasteful spending habits identified in repeated reports by the Auditor General, along with the failure of various departments to collect due revenues, the DNA leader charged: “The Government is desperate.

“The economy is in dire straits, the Government’s finances are in dire straits. This is a prime example - talking about a tax crackdown six months before the election - that shows the Government has no choice.”

Mr McCartney, who was a member of the former Ingraham administration for three-plus years before leaving, saying he felt stifled, suggested that the Bahamas was again paying the price for politically-led decision-making by successive governments.

“The Government, past and present, only does things they think is best to win the next election as opposed to doing what is best for the country,” he told Tribune Business.

“This is a prime example. They’re reactive, not proactive. Only when the guns are pointed at them do they act.”

Mr McCartney said the tax enforcement drive also showed that none of the Christie administration’s turnaround promises had come to fruition, and he questioned whether the Department of Inland Revenue would act fairly and equitably in terms of the alleged ‘defaulters’ it is targeting.

“The Government must not cherry pick who they collect their taxes from,” he told Tribune Business. “Many of those officials within government fall into that category.

“Does this mean, in typical PLP style, that special interests within the PLP will be exempt? There are those in the PLP, and those special interest groups, that owe a significant amount of money to the Treasury.

“We’ve also seen where the PLP have placed in high positions, as heads of departments and parts of ministries, those who owed the Government hundreds of thousands of dollars, including the current Governor-General.”

That is a reference to the real property tax owed by Dame Marguerite Pindling before she took the post at Government House, a sum that was promptly paid following extensive media coverage.

Yet Mr McCartney added: “Is this government, when they talk about cracking down, does this apply to them as well?

“They should be the first ones to act and settle by paying their bills, or the Government must come and crack down on those who have failed to pay their tax while sitting in high places; some of whom are still there.”