NASSAU, BAHAMAS — Opposition Shadow Finance Minister Kwasi Thompson yesterday accused the Davis administration of seeking to raise taxes on Bahamians as it projects a potential revenue intake of $90 million in the coming year from increased fees on various government services.
In a statement, the Ministry of Finance outlined the government’s initiatives directed toward hitting its revenue to GDP target of 25 percent by 2025/2026, noting that various user fees that the Government currently charges are deemed to be sorely inadequate relative to the costs of providing those services.
The ministry 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, adding this will further contribute to the attainment of the Government’s core revenue target. In an accompanying paper, dated March 2022, it was noted that the revenue impact of the initiative could be $90 million in the coming year with an implementation timeline of 12 months.
Thompson said in a statement yesterday, “The Opposition marvels that the government is just now starting to level with the Bahamian people about its plans to increase taxes to meet its stated 25 percent tax revenue to GDP ratio. It is unfortunate that Bahamians should have to learn about $90 million dollars in increased taxes on government services within the next twelve months in the back end of a table near the end of the report titled “Supporting The Revenue Target of 25 percent of GDP.”
He added: “Is the government planning on raising fees for driver’s licenses, motor vehicles, passport renewals? Which fees are the government increasing over the next year as signaled in the report?”
Thompson noted that the report was prepared back in March of this year and questioned why the government did not provide the document to the public in advance of the budget exercise in May.
Back in April, during a virtual summit hosted by Citadel Consultants Limited. Economic Affairs Minister Michael Halkitis said that the government is not looking to introduce any new tax initiatives within the next year but noted that the government was assessing various fees to ensure that they are in line with the cost for the delivery of government services.
Thompson yesterday also slammed the Ministry of Finance as “woefully insufficient”, adding that it raises more questions than it answers.
Financial Secretary Simon Wilson told Eyewitness News however that the paper was “well received by investors”.
Thompson said: “After one year, the government must by now have a clear sense of what specific tax measures it will implement and what the expected yields are intended to be. In addition to the $90 million in additional taxes in the form of increased government fees, the plan ought to have detailed estimates of the revenue intake from all of the proposed additional taxes and other revenue enhancement measures to be implemented by the Davis administration.
“We need to know which segments of the population are bearing the brunt of the government tax measures. Will the new tax measures be progressive and have wealthier Bahamians pay a larger share, or will the government continue to do favors for the rich and connected and give them tax breaks on yachts.”
He continued: “The report also states that the government plans to reduce or eliminate the tax concessions granted through the MyGateway platform. The FNM rejects any attempt to remove the tax concessions it put in place to assist all new Bahamian entrepreneurs, or any attempt to remove the tax concessions for the southern Family Islands and Andros. More importantly, the government at this stage cannot just be paying lip service to expenditure restraint.
“The report keeps referring back to the government’s fiscal strategy report 2021 when this government has already brought a budget to Parliament that ignored the expenditure and deficit targets in that report in contravention to the Fiscal Responsibility Act, 2018.”
Thompson said that the FNM will not support any material changes to tax policies unless the government provides a full justification with proper analysis and estimates for the new revenues and their impact on various segments of the Bahamian people.
Other conditions include the implementation of all the provisions of the Freedom of Information Act and the reporting requirements of the Public Procurement Act and the Public Finance Management Act so that the public is assured at all times that its tax dollars are being appropriately and efficiently spent; and engage all relevant stakeholders with a properly crafted white paper on fiscal and tax reform so as to get the informed feedback from all those who will be impacted by the tax plans of the government.
