The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The DNA yesterday slammed the government’s projected $185m revenue shortfall as “unacceptable and inadequate”, adding that Bahamians had “nothing to celebrate” in the mid-year budget.

Arinthia Komolafe, pictured, the Democratic National Alliance (DNA) leader, said the party had warned the government against targeting an overly-aggressive timeline for eradicating the fiscal deficit without developing an economic growth strategy.

“We further advised them that based on elementary economics it has been proven that an increase in tax rate does not automatically yield a corresponding increase in tax revenues,” Mrs Komolafe said.

“It comes as no surprise that the minister of finance [KP Turnquest] has finally admitted that the government will fall short of its projected revenue for the 2018-2019 fiscal year by seven percent or a whopping $185m.

“The argument that the renegotiated tax structure for gaming houses, lower than expected VAT collections and delay in the establishment of the Revenue Enhancement Unit is responsible for the shortfall is simply unacceptable and inadequate. It speaks to the poor planning, unreliable assumptions, incompetence and poor execution by the government.”

Mrs Komolafe argued that the government “cannot talk this away or minimise their failure in meeting projections that have been relied upon by Bahamians, investors and international agencies”.

“This could negatively impact the credibility and trust reposed in our nation’s projections in future,” she added. “While their admission is commendable, it was always foreseeable and does not exonerate them from this embarrassing outcome. Having placed Bahamians and taxpayers under intense, unnecessary financial strain to meet their own self-imposed targets, the DNA submits that an apology is warranted.”

The DNA leader hit out after KP Turnquest, deputy prime minister, told the House of Assembly last week that government revenues were likely to come in $185m, or seven percent, below 2018-2019 budget projections this fiscal year.

He blamed the undershoot on a combination of the transition to a 12 percent VAT rate; an $18m drop in expected web shop taxes due to that industry’s settlement with the government; and the delayed creation of the Revenue Enhancement Unit that was expected to produce a further $80m.

However, Mr Turnquest expressed confidence that the full-year fiscal deficit will come in $5-$10m lower than the forecast $237m, reaching $230m, because the government was trimming its recurrent spending by $130m or five percent to match the revenue shortfall. Capital expenditure will also be below the anticipated $299m.

Mrs Komolafe, though, argued that there “is nothing to celebrate in the mid-year budget statement for the average Bahamian”. She added: “Any commentary on the reduction in the fiscal deficit year-on-year must be considered in the context of a massive increase in taxes by this government.

“They continue to pat themselves on the back at the expense of the masses that have seen a decrease in their disposable income and spending power... The Bahamian people are simply not impressed with this uncaring government,” Mrs Komolafe said.

The DNA leader said it was “unfortunate” that the government’s focus “is not the people but rather making the figures look good; an objective they are also failing to achieve.” She added: “The Bahamian people are still waiting for this administration to unveil its economic growth plan.

“In the absence of a plan, the government is still struggling to get its fiscal house in order. A priority item for any administration should be addressing the burden and inefficiencies state-owned enterprises (SOEs) impose on the public purse and, ultimately, the Bahamian taxpayer.

“It is common knowledge SOEs receive subsidies and subventions to the tune of approximately $400m annually. The government has announced that further studies and analysis will be commissioned in the coming months.

“This is in spite of multiple studies and reports on SOEs over several years and successive administrations. After almost two years in office, they still lack a comprehensive strategy or plan for SOEs, and continue to pontificate with political rhetoric while wasting taxpayers’ funds.”