Deputy Prime Minister and Minister of Finance Peter Turnquest said the government’s 2018/19 budget is not just about taxes, no matter how controversial the government’s taxes might be.
“The government has implemented a range of measures on the expenditure side to improve efficiencies, reduce costs and to transfer those responsibilities that belong with the private sector to the private sector,” Turnquest said at the National Conclave of Chambers of Commerce in The Bahamas held at Baha Mar June 14.
“With the achievement of a balanced budget in three years, we can start to repay the massive debt we have, invest more in job creation activities and infrastructure, lower the overall tax burden and address the myriad of social and civic issues we face.”
He said on the revenue side, moving to significantly enhance the revenue yield of the tax system was not done capriciously but rather out of a deep sense of responsibility for righting the ship of state and restoring the fiscal health of the government.
He explained the government’s fiscal state of affairs as:
- 7.2 billion: Total debt.
- $381 million: Cost of interest payments on the debt for the upcoming fiscal year. That means, 14 per cent of total revenue goes towards interest payments: In other words, 14 cents out of every dollar earned.
- $360 million: Accumulated arrears from successive governments. This was uncovered after several budget calls this year, and in the budget, this government administration published a transparent list of the various large and small contractors. Also, last year, the government had to repay a separate $400 million in unpaid bills incurred by the former administration alone.
- $76 million: Previously under-budgeted commitments that were also uncovered in a thorough budget review.
The DPM said previous governments have been artificially under-budgeting for contractual commitments, which means vital programs were under-funded, and some vendors were simply not paid including:
- A $4 million government food program, for example, only had a budget of $2.5 million.
- A $6 million commitment for immigration-related software and hardware to support the passport office was never specifically budgeted for.
- A $10 million commitment for software and hardware upgrades to modernize the Department of Inland Revenue was never specifically budgeted for.
“Our fiscal state of affairs has been building from years of fiscal hocus-pocus and hide the debt. Simply put, the chickens have come home to roost and unless we were willing to risk another downgrade to total crap bonds, with our ability to borrow in crisis evaporating, we had to address the problem.”
DPM Turnquest said, “I would love to pull the magic rabbit out of the hat or push the liabilities further down the road but that is simply not possible or responsible. Further, with interest cost eclipsing $381 million, we just cannot afford any more large borrowings.”
This article was written by LLONELLA GILBERT, Bahamas Information Services.