The Tribune

• Sands: Gov’t ‘taxing private sector into oblivion’

• Fred Mitchell admits to ‘tight economic squeeze’

• Gov’t has to target ‘big players avoiding taxes’

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

THE Opposition yesterday seized on remarks by the Progressive Liberal Party’s (PLP) chairman as confirmation the Government is facing “a cash flow crunch” and “taxing the private sector into oblivion”.

Dr Duane Sands, the Free National Movement’s (FNM) chairman, told Tribune Business that the message issued by his counterpart, Fred Mitchell, on Friday to supporters of the governing party both explained the Davis administration’s “aggressive behaviour” towards the private sector and affirmed the “poorly-kept secret” regarding the Government’s liquidity woes.

Mr Mitchell, in a message seen by this newspaper, described The Bahamas as being “in a tight economic squeeze” with the Government seeking to avoid tapping the international credit markets for foreign currency financing because of the high debt service/ interest burden this would impose on taxpayers.

Explaining why the Government was justified in pursuing Bahamian businesses for every single cent owed to the Public Treasury, the PLP chairman - also a member of the Cabinet as minister of foreign affairs - signalled that it is seeking to preserve what little fiscal and borrowing headroom it has given the threat posed by more powerful and frequent hurricanes.

“The country is in a tight economic squeeze. We are seeking to pay as we go, not to borrow if we don’t have to, with hurricanes hanging in the atmosphere ready to strike at any month,” Mr Mitchell wrote. “That means that we have to collect every tax [dollar] that is owed before turning to credit if a hurricane hits.

“What is clear is that poor and working class people have been paying their taxes but some big players have been avoiding paying the taxes. They also have a megaphone to get the [media] and others to shout on their behalf that the sky is falling. The poor don’t have such an advocate. The PLP is their advocate and we do so by ensuring that everyone pays their fair share.”

The Bahamas Uncensored website, widely considered to have acted as a mouthpiece for Mr Mitchell’s views for more than a quarter-of-a-century, doubled down on this message at the weekend by seemingly affirming that these cash flow pressures are forcing the Government to part-pay many of its vendors and creditors in installments rather than one-time.

“Right now, The Bahamas government has decided to take a tough road - the road less travelled - by not going to the credit markets to make up the yawning deficits which confront us,” the website stated. “The Ministry of Finance has decided to heavily control expenditures by parcelling out bill payments to creditors in small bites and collecting aggressively taxes that are owed. Not surprisingly, there is push back.”

Dr Sands, though, contrasted Mr Mitchell’s statement and the website’s commentary with what he described as “the rosy picture” painted by the Government for the past two years that all was fine with the Bahamian economy and the Government’s fiscal position.

“Whoever it was intended for, they finally admitted what was a poorly-kept secret - that there are cash flow pressures - and it explains their aggressive behaviour and their arbitrary behaviour towards the business community in particular,” the Opposition chairman told Tribune Business.

“This administration, having over-stretched themselves with spending, finds themselves in a cash flow crunch and are looking to the private sector as a bottomless pit to be taxed into oblivion to make it up as opposed to addressing it by any degree of correction to make it up.

“The approach of this administration is that they are a Robin Hood government. They are going to take from whomever they perceive to be wealthy to distribute it to whoever they want, and the view is to buy votes and buy favour.”

Mr Mitchell, though, argued that criticisms from the Opposition and others that the Government is “anti-business” do not hold up under scrutiny. Pointing out that all taxpayers have a “legal and moral obligation” to pay taxes that are due, he asserted that the two examples cited - the $357m demand made of the Grand Bahama Port Authority, and $30.844m Sandals tax dispute - were merely seeking to collect what is owed.

“Neither of those examples hold water. What is the Government supposed to do when people owe taxes (big people) and don’t pay? If they do not, you try to get the money. That’s it, plain andsimple,”Mr Mitchell said.

“What you see playing out now is the noise of those who don’t want to pay... Anyone who wishes to settle tax issues knows that the PLP has an open door policy and all matters can be settled amicably. But there is an obligation both legal and moral to pay what is owed.”

Dr Sands, though, argued that the Government is seemingly making no connection between its cash flow/liquidity issues and its continued spending without any adjustments or restrictions. Asserting that the Davis administration “don’t want to admit” the cash flow/liquidity issues, he added: “They continue to paint this rosy picture about how wonderful it is and how many millions are coming off the cruise ships, but the perception on the ground does not support or go along with that.”

Pointing to how the Government was forced to adjust the practice of armed officers entering businesses to accompany revenue officials, following push back from the private sector, Dr Sands added: “We’ve seen these aggressive tactics, not only with Sandals but with the Port Authority and private businesses such as CBS Bahamas.

“We’ve seen armed intrusions to go after perceived tax revenue and many businesses can tell you similar stories about similar aggressive attempts to gain additional tax revenue. They need the money.

“I have it on very good authority that we have professional vendors that are now owed six months of fees, charged by government agencies and the like, whether it’s tax refunds or credits or payment for services rendered. These services should be paid for on a monthly basis and now the Government is six months’ behind. We’re hearing this over and over and over,” the FNM chairman continued.

“It’s certain things are far worse than they wish to let on. I thank the chairman of the PLP for his honesty. We all kind of knew that was the situation but they have been denying it the whole time. He has now put it in black and white.”

Dr Sands added that it was “striking” that the “glaring admission about the state of fiscal affairs in the country” had come from Mr Mitchell rather than the two Cabinet ministers who have oversight of the Ministry of Finance - Prime Minister Philip Davis KC, as minister of finance, and Michael Halkitis, minister of economic affairs.