The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government yesterday appeared to narrow its planned VAT and inner-city ‘tax breaks’, while seeking to deliver on campaign promises of accountability, transparency and good governance.

The ‘Speech from the Throne’, which sets out the Minnis administration’s policy and legislative agenda priorities, said it would “take action to effect a reduction of VAT on breadbasket items”.

The language differs from Dr Minnis’s campaign promises, in which he pledged to eliminate - not just reduce - the 7.5 per cent Value-Added Tax (VAT) on so-called ‘breadbasket’ items, which are the basic food staples required for everyday living.

The scope of the VAT ‘exemption’ plan also appeared to have narrowed, as the Prime Minister had promised the levy would also be eliminated from utility bills (water and electricity) and education services.

These were not mentioned in the ‘Speech from the Throne’, which also appeared to claw back on the breadth of the inner-city or ‘Over-the-Hill’ tax breaks plans promised during the campaign.

While the Government is sticking with the plan to create “tax free economic zones” in deprived communities and inner-city areas, the ‘Speech from the Throne’ seemingly narrowed the ‘tax breaks’ to exemptions on just construction and building materials.

Dame Marguerite Pindling, the Governor-General, in reading the speech said: “My Government will enact legislation which allows duty-free concessions on all construction materials and building supplies used in the construction of business premises, and new of refurbished owner-occupied homes in these zones.”

The scope of these tax incentives is considerably watered down from what Dr Minnis outlined during an FNM campaign rally at Christie Park, when he said: “We will institute a programme of far-reaching targeted tax initiatives to help stimulate business Over-the-Hill and in inner city communities.

“We will help the people in the inner-city to invest in their own communities by using the tax code to spur jobs, economic activity and investment.”

Dr Minnis said then that the tax breaks an FNM government would implement would include the duty-free importation of construction materials for residential and commercial properties; no Business License fees or real property taxes; no taxes on household furniture; no taxes on capital goods and business equipment “after proper vetting”; and lower import duties on business vehicles.

Based on the ‘Speech from the Throne’, only the first of these five categories is being implemented - possibly because the Government’s precarious fiscal position is a barrier to any further revenue ‘give aways’.

K P Turnquest, Deputy Prime Minister and minister of finance, previously told Tribune Business that the new administration may need to be “cut some slack” in the 2017-2018 fiscal year, with the Government’s $7 billion national debt and $300 million-plus fiscal deficits acting as an obstacle to its policy agenda.

While the Minnis administration’s agenda appeared to contain no single ‘game changer’ plans, its policy proposals could achieve fundamental, far-reaching reform if implemented collectively.

While much of the ‘Speech from the Throne’ was a combination of campaign and manifesto promises, and initiatives left by previous administrations, the key will whether the new government can deliver and execute effectively.

The Government especially sought to play to the issues of accountability, transparency and good governance, issues that struck a chord during the campaign trail - particularly with many voters who supported the FNM.

The pledge to “enact and enforce anti-corruption legislation for all Parliamentarians and public officers” was met with one of the biggest cheers.

“The Office of Ombudsman will be created to provide a direct source of relief where people have legitimate grievances due to the actions or inactions of government, or any agency of the Government,” the Speech from the Throne promised. The Auditor-General is also to be strengthened “without government-imposed constraints on its finances”.

While promising to “strengthen the accountability and transparency of the fiscal operations of government” through new public procurement regulations and improved software applications, the ‘Speech from the Throne’ made no mention of the Fiscal Responsibility Act demanded by many in the private sector.

The Minnis administration also indicated it is troubled by the ‘brain drain’, Dame Marguerite saying: “My Government is troubled by the perceived increase in talented young Bahamians seeking their fortunes permanently beyond the Commonwealth of the Bahamas.

“No country can maximise its potential if many of its talented young people enlist their talents permanently in the development of economies elsewhere.”

The new government’s solution to this problem is the creation of a ‘national skills register’ of Bahamians living overseas, along with promises to “address the present national skills deficit”.

Pledges to “establish a one-stop shop to improve the ease of doing business”, and providing Bahamians with the same tax incentives as foreigners, were also ‘low hanging fruit’ and easy promises to make.

When it came to tourism, the ‘Speech from the Throne’ said freelance bloggers would be hired to generate content and publicity about the Family Islands.

On the financial services front, the Government promised to follow through with legislation to create a Bahamian Credit Bureau and ensure this nation meets its automatic tax information exchange requirements.

Public service reform is also on the agenda, the ‘Speech from the Throne’ recognising “that outdated policies, inattention to the development of human resources and the acceptance of mediocrity in the performance of duties have led to the inefficient delivery of public sector services.

“These agencies exist to provide service, and the public should not be frustrated by inattentive or inefficient workers,” it added.

The Government now has to address the ‘how’, and devise details for how it will implement its pledges.