The Tribune

• But many charges ‘sorely inadequate’ to cover costs

• Top official says some fees unchanged for 30 years

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition yesterday urged the Davis administration to “come clean” over plans to raise an extra $90m from increasing user fees paid by the Bahamian people to access multiple public services.

Kwasi Thompson, the Free National Movement’s (FNM) finance spokesman, accused the Government of trying to “sneak” the increase past taxpayers by “burying it” at the back of a report laying out a road map for increasing the Public Treasury’s income to the equivalent of 25 percent of gross domestic product (GDP) within four years.

The former minister of state for finance under the Minnis administration, calling on the Government to identify which “user fees” will increase, by how much and when, told Tribune Business the revelations confirmed the Opposition was correct when it charged that the targeted $1.3bn revenue increase over the next four years cannot be achieved without implementing new and/or increased taxes.

The Ministry of Finance report, ‘Securing the Revenue Target of 25 percent of GDP’, which was released on Monday night disclosed that a reassessment of “sorely inadequate” user fees could yield “potentially $90m in the coming year” if these were increased sufficiently to cover the cost of providing government services to Bahamians and residents.

“The various user fees that the Government currently charges for the many services that it provides to Bahamians are deemed to be sorely inadequate relative to the costs of providing those services,” the report said.

“A detailed examination of these fees is to be undertaken to ensure that they more closely align with the costs of providing the services. This will further contribute to the attainment of the Government’s core revenue target through the medium-term.” This “examination” was to take place over a 12-month period, with any increases likely to involve minimal complexity and be relatively easy to implement, although reforms to existing laws may be required in some cases.

Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business last night that the user fee assessment is an “ongoing exercise” that has yet to be completed. He did not provide any details on which fees are being targeted for an increase, and by how much, but said any rises would take place over an unspecified “period of time”.

The Ministry of Finance paper sets a “12-month timeline” for implementing fee increases that cover the costs associated with the provision of public services, indicating that the Davis administration may seek to introduce a package of reform measures with the 2023-2024 Budget next July or perhaps even earlier.

Mr Wilson, though, pointing to the fee introduced for persons seeing expedited passport renewals within one day as an example of the reforms that the Government is considering, argued there was significant room to increase these charges such that it does not lose money in providing critical services to the Bahamian public.

“The reality is we have a lot of scope for fee increases,” he told this newspaper. “The biggest issue is the cost of the service is so low. For example, the standard passport fee has been the same for 30 years. We’re doing some studies on the issue to understand it and so forth. It’s an ongoing exercise.”

Bringing so-called user fees into line with the cost of providing public services, thus ensuring the Government loses no money, has been an objective that has vexed successive administrations and is nothing new. However, few businesses and individuals are likely to escape these increases if the Davis administration is targeting up to a $90m annual increase.

Among the most commonly used services that could be hit are those provided by the Road Traffic Department, such as driver and vehicle licensing, plus inspection and registration fees. Besides passports, birth, marriage and death certificates from the Registrar General’s Department could also be increased, along with company registration and incorporation fees plus certificates of good standing.

Police character certificates, and Immigration processing and application fees, plus those associated with the various permits issued by that department, could also come under the microscope. Mr Thompson yesterday argued that, given the Ministry of Finance report’s assertion of a potential $90m revenue increase, the Government must already have some idea of the fees it wishes to increase and by how much.

Describing the issue as “a huge concern”, the FNM finance spokesman questioned whether hard-pressed Bahamians still struggling to recover from the COVID-19 pandemic will be able to absorb such an increase given that many are grappling with unemployment and/or underemployment plus the cost of living crisis.

“Any increase in user fees is a direct burden on the Bahamian public,” he told Tribune Business. “We must understand where and which user fees the Government anticipates this $90m coming from, and how much each individual user fee is going to increase by.

“The challenge is that we do not know. The Government has not told us which fees will potentially be increased. That is the problem we need to understand: Which fees are being increased, and how much by? Can the Bahamian public absorb an additional $90m in user fees?”

Mr Thompson demanded that the Davis administration “come clean as to what is being increased and by how much”. He added: “If you have identified a potential figure of $90m, then you must also have identified potential user fees and how much they will go up by. Come clean and tell us all the facts.

“The Government must come clean and tell is in a transparent and open way. We have to learn about a $90m increase in user fees at the bottom of a table in the back of a report. They have articulated this, and it’s their responsibility to come clean and tell the public what it is they are doing.”

The Government will likely retort that user fees have not kept pace with the cost of providing public services, and it thus needs to stem such financial bleeding given how precarious its fiscal situation is with the national debt standing at more than $12bn. Given that there are multiple public services and associated fees, the $90m increase can also be spread out across them and the extent of any hikes minimised.

The Davis administration will also argue that a user fee is not a tax. However, Mr Thompson said in a statement that the Opposition “marvels that the Government is now just starting to level with the Bahamian people about its plans to increases taxes to meet its stated 25 percent tax revenue-to-GDP goal”.

He subsequently told Tribune Business: “We have repeated our concern that the Government would have to increase taxes in order to achieve their revenue targets. We see now that the Government has revealed that they are attempting to do so by increasing user fees.

“The leader of the FNM [Michael Pintard] and myself told them and told the Bahamian people that they could not raise the $1.2bn in additional tax revenues that the PLP stated in its Fiscal Strategy Report without imposing additional taxes. Instead of responding honestly and forthrightly to our concerns, the Davis administration reverted to its usual flim and flam and instead put out conflicting reports and endless spin, only now shamefully attempting to sneak in this news buried under a mountain of words.

“It is unfortunate that it has taken the Davis administration one full year to decide to come clean to the Bahamian people with its tax plans that it knew it had all along.”