The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

PRIME Minister Phillip Davis outlined six key priorities of the 2022 Fiscal Strategy report as he led debate in the House of Assembly yesterday - and hopes to nearly double the amount of real property tax collected.

These include restoring the country’s fiscal health, strengthening local health infrastructure, developing community strategies for each island, maximising investment in the blue economy, increasing the use of non-traditional financing mechanisms such as public private partnerships and pursing fiscal sustainability.

Mr Davis said these goals not only shape the nation’s fiscal outlook but are at the heart of the development of the government’s fiscal strategy.

The Prime Minister also revealed the government’s plans to implement several initiatives to ensure that those who owe taxes pay them.

“This includes the reversal of several policies implemented by the previous administration, which favoured a number of special interests. As previously announced, we have reconstituted and strengthened the Revenue Enhancement Unit, which had been disbanded,” he told parliamentarians during his contribution to debate on the 2022 fiscal strategy report and medium term debt strategy for 2023/24 to 2025/26.

“They are already increasing the number of VAT audits undertaken, to ensure proper compliance with the law. We are also re-establishing the Revenue Policy Committee, a cross-governmental committee designed to eliminate leakage, and identify areas for enhanced collections.

“We will continue to expand the ‘Customs Electronic Single Window’, also known as ‘Click2Clear’.”

Among other things, he said his administration will be reinstating the business licence fee for all operating banks in the country and also foreshadowed the collection of VAT on domestic vacation rental properties in the second half of this fiscal year.

Within the next four years, Mr Davis said his government also hopes to collect more than 75% of the property tax billed.

This, he said, will be a major boost to government revenues as less than 40 percent of real property tax is usually collected annually.

“Honourable members should appreciate that the government’s revenue from real property taxes would be more than doubled if all real property tax billed, was collected,” he said.

“That has to change and to do so, we are making some necessary investments in technology and people. Within the next four years, our goal is to collect more than 75% of the property tax billed.”

“Additionally, having completed the first mass re-assessment exercise in New Providence, over the next three years we are embarking on a comprehensive real property tax reassessment exercise in the Family Islands.”

Mr Davis said as a result of its revenue enhancing programmes, revenue for FY2022/23 is estimated at $2.8 billion.

This represents 21.2 percent of the GDP.

With respect to public expenditure, Mr Davis said his administration remains on course to achieve its fiscal target to reduce recurrent expenditure “to 20 percent of GDP by FY2025/26, down from an estimated 22.6 percent of GDP in FY2022/23”.

To do this, he said the government will implement targeted reforms that includes modernising its pension scheme based on recommendations made by the accounting firm, KPMG.

He added: “We will resume reforms of the State-Owned Enterprise Reform and Rationalisation programme. We will contain costs and drive innovation in the public sector by continuing to digitise government services.”

Mr Davis opened debate on the 2022 Fiscal Strategy Report less than a week after tabling it in Parliament.

It also followed recent criticisms from the Free National Movement concerning the government’s failure to meet the initial deadline to publish the annual report.

As mandated by the Fiscal Responsibility Act, 2018, the government is required to present the report by the third Wednesday in November of each year.

However, Mr Davis told parliamentarians last week that the report was delayed because the timeline was simply not feasible.

He said tabling the report on the aforementioned deadline would have “interfered” with S&P’s bi-annual review of The Bahamas’ creditworthiness.

However, the opposition has since called the explanation “nonsensical”.

Yesterday, Mr Davis added: “I am pleased to announce that in the soon-to-be-tabled revised Public Financial Management Act, the Fiscal Strategy Report and the Medium-Term Debt Management Strategy will be tabled at the same time as the annual budget.”

“This legislation is being revised because we recognise that given the limitations in our information and reporting systems, the fiscal reporting schedule designed by the previous administration, is simply unworkable.”

“As things currently stand, in order to prepare for a November tabling, the documents have to be prepared at least two months earlier, in August or September. To then use this data and projections as the primary influencer of your budget projections would mean that we would subsequently totally disregard 10 months of empirical evidence of the fiscal and economic performance of the country in preparation of the budget.”

“At best, this approach is unwise. At worst, it is simply foolish,” he also said.