The Tribune

By LETRE SWEETING

lsweeting@tribunemedia.net

FREE National Movement officials yesterday agreed with a recent report from the Inter-American Development Bank calling the measures taken by the government to combat inflation not beneficial to small businesses and low income families.

The IDB recently noted the negative impact of expanded price controls on businesses.

Its latest quarterly Caribbean economic bulletin indicated that social assistance to offset the cost-of-living crisis could be better focused on poor families through the use of conditional cash transfer (CCT) initiatives that build on existing initiatives such as food stamps.

The report said: “Furthermore, like price controls, the VAT exemption for electricity bills – and, even moreso, the import tariff reductions and exemptions – would result in government revenues transferred to Bahamians, including those who are least affected by inflation.

“Hence, except for the minimum wage, the remaining policies outlined are effectively untargeted subsidies for everyone - both the rich and the poor. That said, as a short-term temporary measure, the price controls have the advantage of not imposing any direct expenditure costs on the budget,” the report said.

“Beyond targeting food insecurity, well-designed and innovative cash transfers could have other beneficial secondary effects,” the report said.

In agreement with the report’s assertions, Free National Movement leader Michael Pintard said yesterday: “The IDB in many ways is echoing the point that we have made fairly consistently, that the Prime Minister in his basket of options had several things he could do that he failed to do.

“One of those things was to make sure he is not cutting taxes on people who can pay and are not complaining about paying,” Mr Pintard said.

“(Also) removing VAT on bread basket items and expanding the bread basket items, but in a manner that has been advised by the Ministry of Health on a healthy mix of foods and in discussion with other stakeholders. And so there are several things that they have the capacity to do,” he said.

“The government controls taxation at the border. So there are items that they can remove from the tax and again, medicine is one of those things, baby products is another one of those items,” Mr Pintard said.

“I believe that the Prime Minister is sharp, however, he’s unfocused and so he has to spend a significant amount of time at home talking with his ministers who you have seen, he is at odds with in terms of public statements, multiple ministers have a different view than the prime minister.

“Those differences are often sorted out in Cabinet, but clearly the dialogue is not happening and we are paying the price as a country,” Mr Pintard said.

Former Prime Minister Dr Hubert Minnis also agreed that prices need to be adjusted not straight across the board, but with greater consideration for the lower income families.

“I agree that’s been more targeted, especially at the lower class and the middle class. The upper class, inflation will not affect them, if prices go up five times. When you adjust prices straight across the board, the upper class benefits, but the lower class don’t necessarily benefit,” Dr Minnis said.

“So you have to really target them, be it by a specific form of benefits, I have my thoughts. I would not want to discuss it at this time. But I have my thoughts as to what should be done specifically for the lower class and the middle class, so as to advance them,” he said.

“That’s why we had introduced the so-called tax-free zones for the inner city. The plan was to extend tax-free zones throughout the entire country, especially in the marginalised areas,” Dr Minnis said.