The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hurricane Matthew’s impact on government revenues has been exposed by data showing a collective 30 per cent month-over-month drop-off in three key taxes during October.

Figures released on the Nassau Container Port’s website show the Government collected $32.791 million in combined Customs duty, Excise and Value-Added Tax (VAT) revenues on New Providence during October 2016.

This represented a 29.2 per cent drop-off compared to the total $46.706 million these three taxes generated in September 2016, with the almost-$14 million decline likely caused by Hurricane Matthew and the subsequent disruption to commerce and imports.

It is unclear whether the data includes all Customs, Excise and VAT revenues collected on New Providence for those months. It appears unlikely, given that the figures for VAT appear way below those needed to produce the Government’s stated $852 million during the tax’s first 18 months.

However, Michael Maura, chief executive of Arawak Port Development Company (APD), the BISX-listed operator for the Nassau Container Port, told Tribune Business yesterday that the figures came from the Ministry of Finance.

“Those numbers came from the Ministry of Finance. They’re not specific to our port,” he added.

Key revenue streams on Grand Bahama are likely to have been impacted in a similar fashion to New Providence, with the data highlighting the numerous ‘holes’ that Matthew has created in the Government’s fiscal projections and Budget for 2016-2017.

The largest month-over-month revenues declines in October were experienced in Excise taxes, which dropped by 46 per cent - from $16.456 million in September to $8.91 million post-Matthew.

VAT revenues were shown as being down by 26 per cent, having fallen from $13.378 million to $9.894 million. These figures likely refer to VAT ‘collected at the border’, along with Customs duties and VAT.

The revenue decline may also have been exacerbated by the Customs duty and VAT exemptions that the Government announced post-Matthew to ease the recovery from the Category Four storm.

The Central Bank of the Bahamas, in an analysis prepared by its research department, acknowledged that revenue inflows had been disrupted by the interruption to business activity in Matthew’s aftermath, plus the ‘tax breaks’ granted by the Government’s exigency Order to assist the rebuilding programme.

“Expectations are that hurricane-related outlays to facilitate the repair of Government infrastructure and higher social assistance spending, alongside some abatement in near-term revenue potential, will place additional pressure on the fiscal position,” the Central Bank said.

The data displayed on the Nassau Container Port’s website thus highlights how the Government’s already-strained fiscal position is being further squeezed from both the revenue and expenditure sides as a result of Matthew.

It also provides further explanation for the timing of the Government’s crackdown against major tax evaders and defaulters, as it bids to collect an extra $40-$80 million in extra revenues over the next six to 12 months via its compliance offensive.