The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The deputy prime minister yesterday said there were “no plans” for new or increased taxes to plug the government’s COVID-19 fiscal holes, as he urged entrepreneurs: “Don’t let this crisis pass.”

K Peter Turnquest, speaking to reporters outside the Cabinet Office, sought to reassure consumers and the private sector that tax hikes were currently not being viewed as the answer to a projected $800m fiscal deficit that is expected to be “even worse” in 2020-2021.

“There is no plan to go up on value-added tax (VAT) or any other tax at this point. We certainly want to try and manage this within the resources we have,” Mr Turnquest said of the government’s plans for the final quarter of the 2019-2020 budget period, which ends in July.

Raising taxes at this point is likely not to even be on the government’s fiscal agenda given that it would further slow and undermine what little economic activity and consumer spending there is. Such hikes would also be relatively pointless at this juncture for much the same reason - the COVID-19 lockdown has brought all revenue-generating activities to a halt.

However, new and increased taxes may be in play longer term when The Bahamas has to pay back the extra debt it will incur in saving the economy from collapse and the government’s related deficit spending.

“Bear in mind this crisis is going to cause some significant loss in revenue to the government, as it is to individuals and to businesses, and we are going to have to figure out how we are going to address that for the long-term,” Mr Turnquest added. “One thing that we cannot afford to happen is for us to amass significant debt that we saddle the future generations with.

“We want to be careful about that, and be as responsible as we can with respect to that, but with the same token understanding that this is a difficult period. Coming out of this is going to be very slow. Job creation and job retention is going to be slow, and so this is not the time to be talking about increasing taxes.

“We have to figure out some things, and make some adjustments, to ensure that we live within the means that the people have given to us. This is going to take a lot of creativity. It’s going to take some bold steps in terms of our state-owned enterprises, and how they operate to make them more efficient and less of a burden to the taxpayer. But as far as we are concerned, at this point we see no increase in taxes.”

Mr Turnquest, meanwhile, called on Bahamian entrepreneurs to seize the moment and develop new, creative ideas for reviving the economy and job-creating growth. “Again, I just say to all those that are burning with an entrepreneurial passion: Do not let this crisis pass,” he said.

“This is an opportunity to refine your effort, and to figure out new ways of doing things. Maybe some of the ‘big box’ legacy firms will find out they are trouble if they don’t adapt and change the way they do business and interact with the customers.”

“This is an incredible time for us, an historic moment, and we can either choose to retreat and say ‘woe is me’ or we can use this to create new opportunities for ourselves and for our country.”

Again moving to smooth over the Prime Minister’s weekend criticisms of the private sector, where business owners were described as “soulless” and “heartless” for so swiftly laying-off persons amid the pandemic, Mr Turnquest said: “We have had conversations with the business community on Monday to talk about where we are and the realities of where we are, also to talk about the future and how we might go about restarting the economy and business here in the country.

“We will continue to have dialogue as we refine our plans both in terms of the COVID-19 response but also as we look forward to the new budget in terms of 2020-2021, and which the private sector has been very helpful on.”