The Tribune

THE Free National Movement has criticised the Speech from the Throne, saying the promise to reduce value added tax to 10 percent across the board will lead to a loss of $800 million in government revenue over five years.

In a statement issued yesterday, the FNM said the speech contains promises that will mean significant government expenditure, however, there has been no explanation about how these plans will be paid for.

The party also questioned how the government will fund its promised pension increases for senior citizens and catastrophic healthcare at a time when the country’s finances are strained.

“The speech fails to address the seriousness of our fiscal situation,” the FNM said.

“It does not address the ongoing necessity for tax reform and for reform of the state owned enterprises that are critical to fiscal consolidation over time.”

 The opposition party said the Davis administration has promised to reduce value added tax “without providing any clear plans on how the reduced revenue will be replaced” and failed to provide a timeline on when this will be done.

 “The reduction in VAT will result in an estimated $160 million annual revenue – or $800 million over five years – at a time when the country’s resources are strained. The PLP policies have only signaled more and more spending but have been silent on how it is to be paid for. The government must account to the people and is required by law how (to state how) they intend to justify the reduction (in) revenue.

 “The PLP seems determined to pursue fiscally irresponsible policies to accomplish a reduction in value added tax, further reduction in business related taxes to be provided as incentives and proposed social and infrastructure spending,” the FNM said.

 Regarding the government’s promise to increase old age pension benefits, the FNM questioned how this will be funded.

 “Do they intend to increase NIB rates? Why didn’t they say so?

 “The PLP has promised to introduce a catastrophic health insurance plan. Do they intend to have all Bahamians pay a monthly insurance premium to cover this insurance? Why didn’t they say so?

 “The speech also provides for exponential increases in expenditure without a clear plan or even mention on how they are going to pay for such a dramatic increase in expenditure. The PLP government has put together plans to add hundreds of millions of dollars in spending during its term while seeking to cut hundreds of millions of dollars in tax revenue at the same time.

 “It is an impossible calculus that speaks to their irresponsible approach to governance. The government appears to be making promises it cannot or has no intention of keeping.”

 The FNM said the Davis administration appears to be heading for a drastic shift away from the fiscally responsible policies that are required for a robust recovery.

 The FNM said the speech did not mention the critical reforms needed to state owned enterprises, which are a drain on the public purse.

 While the new administration said it will restart the government’s house construction programme, the FNM said it is concerned that past practices “which led to great abuse and corruption in housing construction, and the sale of overpriced poor-quality homes” will return. The FNM also said it supports the government’s plans to continue with programmes the Minnis administration had left in place or proposed such as expunging of criminal records; the regulatory framework and draft legislation for the marijuana industry left in place; the digitization programme in the public service; advancement of renewable energy; further strengthening the scope of the Fiscal Responsibility Act; strengthening the Sovereign Wealth Fund legislative regime; and draft legislation to replace Emergency Orders, among others.

 “All of these are FNM initiatives. We are pleased that the government will continue on with them despite the failure of the PLP administration to give the FNM credit for same,” the FNM said.