The Tribune

• Calls for privatisation exercise to boost treasury

• Says focus should be on long-term plans for tax reform, economic growth

• Warns incoming government not to dismiss need to raise taxes

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A LEADING financial expert doesn’t expect a new government to make significant changes before the mid-term budget which is due next February.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business: “We have to respect that governments are continuous. We’ve had a budget that was actually presented in June of this year and has gone through a parliamentary process and passed into law.

“If we are thinking that that was a fictitious budget then we have a significant credibility issue with the outside world. So, I would submit that whatever has been submitted in this budget for this exercise all political parties sat in the House so it is going to continue.”

The new administration should focus on the objective of carrying forward long-term plans for tax reform and economic growth rather than looking backwards, said Mr Bowe.

“When we talk about the economic situation, we talk about the debt situation and how we arrest the growth in debt,” he said.

“That means that when we look at our current fiscal situation we tax less than 20 percent of GDP, most developed countries tax at 25 percent so there is some headroom as it relates to how much the production in the economy can be directed towards governments.”

Calling this headroom an opportunity to raise taxes, Mr Bowe warned the incoming government that to say there is no need to raise taxes is “really playing on vote catching, sentiment and emotion”.

“I don’t want it to be an overemphasis on taxes, because we also need to grow the economy,” he said.

“We need to be doing things to allow the economy to expand, so that the tax burden can be kept at minimum levels.

“That is also going to call for some expenditure control, because it is going to have to be how we reduce those elements that previous governments have argued are consistent costs.”

 These costs are labour, interest on loans and the day-to-day operation of government wasn’t as high 40 years ago.

 “So we have to find a way to have those costs absorbed by the private sector,” said Mr Bowe.

 A privatisation exercise to boost the treasury should not be an option, he said.

 “But rather the first thing the government should do is look at the accrual based accounting because one of the sides that doesn’t get spoken about is the government’s inventory and government assets. If you were to ask the government what buildings or what infrastructure roads or water mains, electrical lines that the government itself installs and not just merely the various utility companies, they probably would have a hard time telling you.”

“Some would be better suited for sale and disposition like the state owned enterprises could be better in private hands. Some could be utilized in an income earning capacity, like the government leasing 50 percent of their buildings, which could help to pay for their occupancy.”