By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Deputy Prime Minister yesterday pledged there will be no further VAT increase before the next general election, as he slammed "mischief" and "nonsense" spread by social media.
KP Turnquest told Tribune Business that a further VAT rate hike would not occur "in this administration's term", identifying ex-Cabinet minister and PLP chairman, Bradley Roberts, for being one of the main culprits behind what he called disinformation.
"There is no VAT increase contemplated in the near future or foreseeable future, contrary to the WhatsApp and Facebook mischief put out there," he told this newspaper. "It's Obie Roberts and Bradley Roberts running on with this nonsense. It will not happen in the near term, and not in this administration's term."
Mr Turnquest's comments appear to rule out any change in the present 12 percent VAT rate until 2022, which is when the Minnis administration's term in office expires if it runs its full course, and a general election must be called.
The Government indicated that the rate hike unveiled in the 2018-2019 budget will be sufficient to pay off its $360m in unfunded arrears, and meet the Fiscal Responsibility Bill's debt consolidation targets, but fulfilling Mr Turnquest's promise will largely depend on avoiding any major performance deterioration or sudden shock to the public finances.
The deputy prime minister described the fiscal performance for the first two-and-a-half months of 2018-2019 as "very encouraging", but declined to provide details before the release of the Government's first quarterly report that is expected soon after September's end.
"We want to be transparent, but given the VAT concerns we want to make sure we give it an opportunity to show real results," Mr Turnquest said. "We don't want to inundate the public with information either."
The 60 percent rate increase, from 7.5 percent to 12 percent, is projected to increase VAT revenues by a gross $400m and help narrow the 2018-2019 deficit to a sum equivalent to 1.8 percent of gross domestic product (GDP) - in line with the Fiscal Responsibility Bill's targets and "glide path" for getting the deficit to 0.5 percent by 2020-2021.
Mr Turnquest, meanwhile, said the Fiscal Responsibility Bill was just one element in a four-strong legislative package that is intended to achieve "a total overhaul" of the public sector's financial management processes, systems and governance.
Pointing to the Public Financial Management (PFM) Bill, as well as the Public Debt Management Bill and Public Procurement Bill, the Deputy Prime Minister said earlier implementation of this legislation may have prevented the fiscal "indiscipline" that threatens to cost Bahamian taxpayers dearly.
While the Fiscal Responsibility Bill is due to be laid in the House of Assembly next week when Parliament resumes sitting, and the Public Debt Management Bill and Public Procurement Bill both tabled before year-end, Mr Turnquest revealed that the Public Financial Management Bill may only be ready in time for the 2019-2020 "Budget cycle".
Emphasising the Government's determination to modernise its financial systems, and come into line with international best practices, Mr Turnquest told Tribune Business: "The Public Financial Management Bill will be a while. We hope we will have that for the next Budget cycle. The Public Debt Management Bill and Public Procurement Bill, hopefully we're able to lay those before the end of this year."
Describing the Public Financial Management Bill, he added: "It's a total overhaul of the Financial Administration and Audit Act, contemplating improved financial reporting and exercising some changes in the way reporting is done.
"The Bill has some specific parts with respect to improving the management of the fiscal accounts, and will hold accountable those responsible for managing these Budgets as well as reporting. Modernising, that is the objective."
The Public Financial Management Bill will set detail accountability expectations for government agencies, and include provisions for sanctions over financial misconduct and crimes. The disclosure requirements for annual Budgets will be enhanced, with the overall objective of improving accountability, oversight, management and control of public funds.
Mr Turnquest, meanwhile, said the Public Debt Management Bill was designed to "optimise" the Government's debt structure by ensuring the interest paid, and maturities (date at which principal must be repaid), were such that the burden on Bahamian taxpayers was kept as low as possible.
"It's about organising our debt structure, ensuring we have the most optimal terms and maturities; ensuring we're optimising various elements of the debt structure," he told Tribune Business.
"Hopefully this whole suite of legislation will modernise the governance within the fiscal administration. It will enable participation and direct feedback from the public; it will increase the flow of information to the public, so they will be aware of where we are and the rationale for some of the decisions we make.
"There will be more of an insight into the assumptions behind the Budget, so the public are aware of what the priorities and considerations of government are. At least they will understand the rationale."
Mr Turnquest said the Bahamas might have prevented the fiscal "indiscipline" that placed the Government in its present predicament, with an $8 billion national debt and $300m-plus annual deficits, had these Bills been designed and implemented earlier.
The last Christie administration increased the national debt by $2.2 billion over its five-year term, despite enjoying around $1 billion in net new revenues from VAT over its last two-and-a-half years. That came on top of the $1.5 billion worth of "red ink" added by the prior Ingraham administration.
"We've just come through a period of tremendous indisciplined management of the fiscal affairs of the country," Mr Turnquest told Tribune Business. "We need to get ourselves on a sound footing for responsible management and good governance.
"This legislation is an attempt to improve these standards, so this government and future governments can be guided accordingly. We certainly would have avoided some of these issues we've had to confront over the last couple of years and continue to address today."
Comments
birdiestrachan 5 years, 7 months ago
The truth no one can believe anything that comes out of Turnquest mouth, him nor doc. They will not raise VAT before the election. but if they the FNM wins again dog eat your lunch doc them will increase VAT.
screwedbahamian 5 years, 7 months ago
Try taking that to the bank ?? Okay, the previous loan officers and middle and top management of the Bank of the Bahamas will secure a Personal loan with it.
alfalfa 5 years, 7 months ago
Enough already. Everyone is tired of hearing about what Christie's govt. did. You promised to fix it and make things better for the average Bahamian and country as a whole. Print the list of what you have done to increase disposable income, and your plans to correct our financial woes, that does not include increasing taxes on the people. Will be looking.
bogart 5 years, 7 months ago
EXCELLENT...,!!!!!......PORE ORDINARY BAHAMIANS ...OVERJOYED AT DIS.......DIS SIMPLY MEAMS ....GIVEN NOONE CAN PREDICT FUTURE......IFFIN DERE GON BE ANY ....NEED FER TAXES...... WHICH IS LIKELY......FINALLY ...WILL HAVE PERSONAL INCOME TAXES......WITH CREDITS FOR DOING NATION BUILDING TINGS....AN STEERING ECONOMY IN DESIRED ....AREAS FOR ...DEVELOPMENT....DIVERSEFYING.....ECONOMY...FINALLY .... CATCH SENSE ...,!!!!
BahamaPundit 5 years, 7 months ago
These guys are like a pair of tired warn out Clark shoes. Nobody wants to hear a word out of their mouths, because they are completely untrustworthy. In all honesty, they should resign and call an ellection. They have zero political capital left!
DDK 5 years, 7 months ago
Too right!
TheMadHatter 5 years, 7 months ago
"Mr Turnquest said. "We don't want to inundate the public with information either." "
Nope, fer dang sure we aint givin' no infuhmashun to them yard niggers - thems caint read no-how.
BahamaPundit 5 years, 7 months ago
FNM & PLP Playbook 1. Raise taxes with lies about debt payment. 2. Buy or start a crazy expensive nonessential construction project far from the public view (Lucayan Hotel, BAMSI, Carnival, Baseball field). 3. Pay huge costs to contractors, lawyers, realtors and others affiliated with the party and basically steal at least 50 million dollars. 4. Leave the Bahamian tax payers to pay the 200 million dollar mess. 5. Start another project (rinse, repeat).
DDK 5 years, 7 months ago
How can this man even imply that there will be another tax burden placed on The People? He and his cronies are rich and do not care. They lied about the need for VAT. In the first instance we were told by, I believe, both the PLP and FNM, that we needed VAT to comply with WTO, which does as it feels with tariffs and cares not a whit for "developing" or "undeveloping" countries. Along comes the FNM and increases the VAT because the PLP left us with too much debt. In fact both parties are responsible for the mess our country is in, although perhaps one more so than the other. Now the FNM is spending and borrowing like a drunken sailor. Mr. Turnquest threw a crumb at retailers for elimination of duty on clothing and shoes. Is presentation of the Business Licence enough for this exemption? ? Oh no. They want so much data and information every time you import and even invoices for future purchases. They really had no serious intention of eliminating the 25% duty and for the most part retailers now have such a high rate to pay on imports they may as well close down and try their luck in the numbers houses. As for Freedom of Information and Accountability, if what they put forward in the HOA is anything like the budget, I am in full agreement with the poster above that they should resign and call an election. Viable alternative party or parties should show themselves post haste. Mediocrity is not an option. REAL CHANGE and ACCOUNTABILITY is needed. No more all for me baby or some of the people's time garbage.
Damifiknow 5 years, 7 months ago
Oh da bread basket bunch! Making promises again! Corn beef so high ,they should call it Crown Beef now!Sucking every drop you can out of the common people to keep the govt. people happy!
sheeprunner12 5 years, 7 months ago
KPT has put his foot in his mouth (again) ........ He cannot go ahead and raise VAT before 2022 ........ and we cannot trust to re-elect the FNM in 2022 because they will raise VAT again ...... The PLPs have gotten him to bite a bait that can come back to bite KPT and the FNM in the 2022 election
BahamaPundit 5 years, 7 months ago
Does anyone anticipate any positive thing coming out of this administration based on their performance thus far? The only logical expectation would be more heartbreak and disenfranchisement. The only way they could rectify their tragic performance would be to pass the Freedom of Information Act, Campaign Finance Transparency Act, Term Limits and Fiscal Responsibility Act. Only then would they start to begin to appear like the administration they promised to be on the campaign trail. Other than that, just darkness, more and more darkness and damage to the country is in store for us.
TheMadHatter 5 years, 7 months ago
BahamaPundit - i agree100%. They won't pass those. They don't want the people to see the money (only pay it).
Porcupine 5 years, 7 months ago
Even if they pass them all, there will be little to get them to comply. It's not like we have had criminal law on the books which they totally ignore, unpunished.
OMG 5 years, 7 months ago
VAT, VAT, VAT. What about the raft of othr sneaky tax rises. If you bring a parcel in by air freight you now pa $10 customs handling tax, but then a brokerage fee to the people who actually do the papetwork. Then you pay duty and now pay VAT on the customs handling charge. Tax on tax. Tyre/ ac environmental tax. Environmental tax ????? Thrown on the dump like before.
birdiestrachan 5 years, 7 months ago
Turnquest does not believe the Bahamian people have any understanding. that is why he says he does not want them to know much, The on line buying will be of the past. they will go out of business. and more people will be out of work.
VAT is charged on the service and the item purchased.
Its the peoples time. It is doc and Turnquest time really,
John 5 years, 7 months ago
Does this mean that there would be a VAT hike shortly after, should the FNM win the next election? And when taxes are increased when there’s no real growth in the economy where does that extra tax revenue come from? Out of the pockets of the people who are paying the taxes! What initiatives has the government taken thus far to grow the economy? Or at least stimulate it? They have launched an assault of increasing taxes with no corresponding relief for consumers or businesses. What about the post office? The only thing happening at the proposed new site is weeds are ‘a growing wild.’ Come on. Why should the public have to wait so long for the replacement of an essential service. And the FOURTH FIRE at BPL in barely a week and no one arrested?
Socrates 5 years, 7 months ago
hundreds of millions needed for BEC and Bahamasair who cant pay their bills without help, millions and millions for hotels on GB, WTO accession whatever that will bring, and the list goes on. i say, lets wait and see..
Sign in to comment
Or login with:
OpenID