Craig A “Tony” Gomez and Kendrick Christie.
• Accountants warn: Budget ‘no game changer’
• Govt ‘history of falling short’ over revenue
• Service must match public sector wage rise
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Accountants have warned new and/or increased taxes “have to come” if The Bahamas is to slash its near-$10bn debt, as they branded the Budget “no game changer” for the nation’s economic crisis.
Craig A “Tony” Gomez, the Baker Tilly Gomez managing partner, told Tribune Business that while the government’s 2021-2022 fiscal plan “don’t set off any alarm bells” for Bahamian businesses and consumers it had merely postponed the inevitability of certain tax hikes in years to come to pay for the debt blowout sparked by COVID-19 and Hurricane Dorian.
While the Minnis administration was correct not to endanger the post-COVID recovery by avoiding any across-the-board increase in VAT or other taxes, he added that it was alarming that the national debt is forecast to increase by almost $4bn in just five years.
Warning that The Bahamas has “a history of falling short” with its revenue forecasts, resulting in greater-than-predicted deficits, Mr Gomez added that it was critical that taxpayers see value for every dollar spent by the government such as the planned $100m public health sector upgrades.
And, with the total civil service wage bill forecast to increase by some $11.5m to $670.935m in the upcoming 2021-2022 fiscal year, he argued that it was vital Bahamians see something in return via an “improvement in service across every sphere of the government”.
Mr Gomez was backed by Kendrick Christie, the Crowe Bahamas accountant and partner, who branded the government’s fiscal plans as “a transition budget” that did not go far enough in containing spending.
While backing many of the budget measures unveiled by the government, he asserted that there was “not enough to go the distance” when it came to generating sufficient gross domestic product (GDP) growth to pull The Bahamas out of its post-COVID slump.
Describing the Budget as “straightforward”, as the Minnis administration sought to balance multiple competing priorities, Mr Gomez indicated that the decision to leave new and/or existing major revenue sources well alone had only delayed the inevitability of increases for at least one more year.
“I don’t think there’s a lot of alarm, and alarm bells, that immediately go off,” he told this newspaper. “I think for the most part people were looking for VAT increases and also possibly the introduction of personal income taxes. None of those items have appeared at this point in time. I think the government has done great in not increasing VAT.
“But, from a financial perspective, we know the picture this budget paints indicates it’s not long in the near future, with the deficit running as high as $951.8m...... It has to come. There will be increased taxes or even a personal income tax.”
Mr Gomez’s comments contrast sharply with those of Marlon Johnson, the Ministry of Finance’s acting financial secretary, who last week told a post-budget press conference that the “reflation” of the Bahamian economy post-COVID as tourism returned and more industries re-opened would “obviate” the need for new and/or increased taxes.
The Baker Tilly chief, though, told Tribune Business that “from a financial perspective I see something else” given that The Bahamas will have added $3.1bn-plus to its national debt by end-June 2022, taking it over the $10bn mark, if the Government’s forecasts hold true.
The Minnis administration’s Budget last week sought to balance The Bahamas’ need for economic growth, and its own general election ambitions, with maintaining as much fiscal prudence as it could muster and satisfying the likes of the International Monetary Fund (IMF) and the credit rating agencies.
Wholesale tax increases in the middle of a recession would have only further set back The Bahamas’ recovery by sparking more business closures and unemployment, but Mr Gomez warned that the country cannot hold back the fiscal tide forever.
“We have cause for concern, even when considering the unusual nature of COVID-19 and Hurricane Dorian, given that in 2016-2017 the national debt was $6.55bn, and five years later it’s projected to be over $10bn,” he added. “That’s something we have to keep an eye on. The interest payment of $512m is alarming, but we understand the impact of COVID and Dorian.
“Why that is significant is because we know that in Budget planning it’s so easy to maintain your expenditure as per the Budget. It’s the income (revenue) side that is very fickle. We know we have a history, not just this Budget, with financial planning. We have a history of falling short on the revenue side of the Budget.”
Zhivargo Laing, minister of state for finance in the 2007-2012 Ingraham administration, was among observers who last week suggested the current government’s revenue projections for 2021-2022 were too optimistic having come off the worst economic contraction in The Bahamas’ history.
Mr Gomez echoed this by warning that any under-shoot of the $2.245bn revenue target, a 35.5 percent increase on the prior year, would leave The Bahamas’ with a worse-than-projected deficit and increased debt. However, the Government has repeatedly said it has managed to keep The Bahamas’ 2020-2021 deficit on track with target by cutting spending.
“From a social perspective, taxpayers have reached the point or sensitivity in their budget planning where they want to see value for dollars spent,” the Baker Tilly chief said. “The fact we are allocating $100m to the two hospitals; we know the biggest issue with hospitals in The Bahamas is quality of service.
“If taxpayers are going to be investing additional monies in medical facilities in The Bahamas, they need to see the quality of these facilities and the quality of service otherwise it’s another frustrating monument for taxpayers in this country.”
Mr Gomez continued: “If they see an increase in civil service salaries, taxpayers must see an improvement to service across the entire sphere of government. Why increase salaries if the service is even worse?”
Meanwhile Mr Christie, while backing the Government’s decision not to increase VAT, said of the Budget: “I don’t think it goes far enough when you look at measures to reduce expenditure. I don’t think it went far enough in balancing the Budget. I’m curious that civil service salaries did not go up....
“I call it a transition Budget in not doing all that it should have been trying to do. We have to find ways to reduce some of the inefficiencies in government. The whole we tax has to change at some point, but it would be difficult to do right now. It will probably be addressed in another Budget.
“With an election right around the corner I don’t think anything drastic will be done. The timing of this is important. It’s like the fourth quarter and your team is behind by two points, and you don’t want to do anything to hurt your chances of a win. It [the Budget] is not a game changer and I still think we’re not addressing the inefficiencies.”
Comments
bahamianson 2 years, 11 months ago
We spend what we do not have , we never learn , and the cycle continues.
stislez 2 years, 11 months ago
To a smart person all they saying is they gonna raise tax, matter of fact the mere thought of them saying they don't intend to do it lets me know it coming. They saying though, technically minnis want to raise tax but he wouldn't dare do it because election right round the corner and doing it now will hurt their chances of winning. Smh, dese man dem playing games bey and telling you to your face dis how it go. Obviously they know they aint dealing with smart people. To come out an say that, an people willingly go out there an vote, den when dey come in 1st ting dey do is raise tax, na ya want cry and complain...........
tribanon 2 years, 11 months ago
These greedy public accountants would love nothing more than to see the introduction of a complicated income tax based system that will force many residents and resident businesses to hire them to fill out their annual income tax returns. Worse still, they are likely to lobby government to require that all income tax returns be certified by a public accountant or public accounting firm.
Where were these same greedy public accountants when our national debt was being rung up to unsustainable levels by successive corrupt governments? I don't remember them speaking out loudly in public to sound the alarm bell. It's so obvious they're only thinking about the windfall tax return preparation fees they would stand to pocket annually if a complicated income tax system is forced on us. And let's face it....our corrupt government officials have a notorious track record for making everything much more complicated and costly than it need be.
And these greedy public accountants would happily have us pay more taxes without government first being reformed to stamp out much of the current ongoing waste, fraud and outright theft that is so rampant and prevalent throughout our government agencies, government departments and government controlled enterprises. Besides, what makes these fat cat public accountants even think that most of us can afford to pay additional taxes. They more than anyone else should know that most small and medium-sized Bahamian businesses are on the verge of going out of business, as well as some of the larger businesses.
bogart 2 years, 11 months ago
Indeed, indeed Tribanon. Where were these accountants where the gov't introduced years ago the minimum $210. dollars weekly 40 hr.?wage, many private employers know it is difficult to be guided by govt. and businesses in good conscience routinely, automatically have to raise it ? Predator banks, land title bundles of titled documents stacks of many old 100 years plus old deteriating fading inks on paper in vaults wid lawyer opinion held by banks representing billions of dollars , Where were these accountants when the gov't brought on the regressive VAT ?.....AND then SECOND dose of additional VAT ? Pushing nation into largest poverty levels...6th most expensive nation in the world... ? Just good marketing to just pop up for optics to have dere connected Accounting companies named in story to do wid impending tax and get free ad.
KapunkleUp 2 years, 11 months ago
Your not far from the 6th most expensive nation in regards to cost of living. According to this site, we are the 7th most expensive for cost of living. https://worldpopulationreview.com/cou...">https://worldpopulationreview.com/cou...
bogart 2 years, 11 months ago
Thanks KapunkleUp. I am trying to get over the groceries stores advertising in the newspapers corn beef at $1.99 and other products using cents knowing that no use of cents means that correctly true advertising means products costs should be rounded ie corn beef at $2.00. All of the more plentiful foodstore products wid some dollar and .99 cents now is 1 cents more expensive. Isn't it ?
John 2 years, 11 months ago
Not necessarily so: remember the rounding up will only happen on your final bill. So you will wither lose one or two cents when this happens or gain two or three cents.
bogart 2 years, 11 months ago
Great John, if it's only on the sum of all advertised individual priced of all items added and then the sum total then rounded for customer.
Proguing 2 years, 11 months ago
“Accountants have warned new and/or increased taxes “have to come” if The Bahamas is to slash its near-$10bn debt”
Hummm we were told that we needed VAT to slash our debt, and what happened? Our debt exploded. In other words more taxes = more debt in this country. How about reducing expenses? How about balancing the budget? This is what we need to do. We cannot live beyond our means eternally.
DDK 2 years, 11 months ago
Either they do not have the ability to understand this simple logic, or they are, quite simply, thieves!
KapunkleUp 2 years, 11 months ago
Thieves and political reelection whores.
JokeyJack 2 years, 11 months ago
We dont know what happened to the VAT money because Brave Davis will not call a meeting of the PAC Committee. He will still get plenty votes in the next election though. Bahamians actually love paying VAT. It makes them feel important.
DDK 2 years, 11 months ago
.
TalRussell 2 years, 11 months ago
Whatta you'd expect? Like, Judges and society's upper-class - living in a colonist realm - is all for "intentional Criminal libel" - so is the Accountants as RedForward game-changers so ordained to be leading the charge for imposing new and/or increased taxations, yes?
SipPis 2 years, 11 months ago
It would be an interesting experiment to see just how quickly the country dies as soon as a personal income tax is introduced. I will have my stop watch ready.
longgone 2 years, 11 months ago
For sure!!
KapunkleUp 2 years, 11 months ago
This pretty much sums it up... https://en.wikipedia.org/wiki/Taxatio...">https://en.wikipedia.org/wiki/Taxatio...
TalRussell 2 years, 11 months ago
Unfair form taxation when the VAT becomes a big chunk, legally thieved by the state from right out the lifetime income of the struggling working class.
Yes, more taxation forms to file is goin' to require that the working class is to be made to engage for-hire and at a price,** professional services offered by the accountants?
John 2 years, 11 months ago
In the US this weekend there was a great shortage of workers. Persons who were needed to man parks and theme parks and other holiday related events as Americans celebrate one of their most unrestricted and free-to-travel and vacation holidays in over a year. Many employers found themselves having to pay above the $15.00 minimum wage, just to lure workers out of their homes and wean them off the gov $600 a week stimulus checks. Why work or even go looking fir a job when you can stay at home and earn the same pay? For doing nothing. And so the government has promised to end these stimulus checks and get Americans back to work. And two new budget airlines launched in the US recently and joined hotels, resorts, car companies restaurants etc., in touting this weekend as one where businesses could not be better. And they look at is it as great things to come. President Joe Biden plans some six trillion over the next few years, and despite his proposed increase in taxes on America’s richest citizens this will not be sufficient to cover America’s debt. While there will be a decrease in deficit spending, America’s debt to GDP ratio is expected to be 117%. But why worry. America will most likely print more and more money to cover more and more debt. An option that is not readily available to The Bahamas. And one thing this Bahamian government must be certain not to do is increase taxes such that it creates a stagnant economy and government realizes less revenue than it would have done before it increased the taxes. One thing government should not ignore is the 6 Trillion Dollar US additional spend. How can this country tap into that? Not only will Americans have more disposable income, but many seem more anxious and willing to travel and to spend, spend spend and help shake off the Corona pandemic and it’s grimy hold on the world’s economy. So the job is not only to get more to come here, but also to spend more money. Can this country increase the tourist tax revenue by $1 Billion annually ?
newcitizen 2 years, 11 months ago
What are you talking about? There are no weekly stimulus cheques being sent out to people.
longgone 2 years, 11 months ago
Income Tax?? Come on Man----The Government cannot even collect Real Property Taxes when all the they have to do is seize property from delinquent owners. Anyone with a sharp pencil can avoid income tax.
John 2 years, 11 months ago
No Bahamian should be required to pay property tax on their owner occupied home. They pay 10% VAT when they purchase the property and 35% duty plus 12% vat on all the materials used to construct the home. Is that enough tax or VAT?
newcitizen 2 years, 11 months ago
Who should be the ones paying then? Bahamians elect successive governments who spend money like they never have to pay it back. Now they have finally spent enough that we have a serious problem, but somehow Bahamians are so special that they should not have to pay.
You don't think Bahamians should need to pay taxes on property? Well maybe you should have demanded the government not spent the money in the first place.
DWW 2 years, 11 months ago
read recently and it is appropriate here: to put into perspective how big a billion actually is. a million seconds 11.5 days. a billion seconds is almost 32 years.
bahamianson 2 years, 11 months ago
We are on a hamster wheel in the Bahamas. People want raises from the same economy every year. We are being inundated with migrants that cannot pass a grade 3 exam , they have an excessive amount of children that they can't afford to feed, clothe, educate or provide a means of health services for. How can re rely on the majority of these people to make a significant contribution to our economy? We , therefore, have to rely on the minority to pay more taxes to feed , clothe and educate the majority. We we run out of money , we go back to the minority and increase taxes because we need more money. You cannot punish the minority for the majority's inability to keep their legs closed . You cannot punish the majority for the minority's inability to make sound decisions or their inability to sacrifice Everyone must pay his fare share including the majority. The minority may have 1 or 2 kids because they know how expensive it is to have kids. They may sacrifice for them. The majority do not. I know that this is a sweeping generalization, but it is true.
newcitizen 2 years, 11 months ago
What are you talking about? You think 'migrants' are costing the country all this money, and not the rampant thieving that goes on at every level of the government? Always ready to blame the Haitian for the problems caused and continued on by Bahamians.
Bahamians are to blame for electing government after government that took whatever they wanted from the public purse.
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