The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Democratic National Alliance’s (DNA) chairman believes public sector unions are “shooting themselves in the foot” by demanding 100 per cent employer-funded pensions and benefits, describing this as “unsustainable”.

Andrew Wilson, in a recent interview with Tribune Business, said that apart from increasing revenues via reforms such as Value-Added Tax (VAT), the Government also needed to focus on reducing its spending to escape its fiscal woes.

“They have to look at cutting the cost of government,” he told this newspaper.

“The politicians like to talk about building homes; 1,000 new homes. But there’s 5,000-10,000 people in the Bahamas who have lost their homes. Wouldn’t it make sense to recycle those homes.”

Focusing on other targets for spending cuts, Mr Wilson alighted on public sector union contracts.

He told Tribune Business: “Someone needs to have a conversation with the unions, because the unions are shooting themselves in the foot with demands for 100 per cent pensions, health insurance.

“Someone needs to sit down with the unions, because there’s no way this is sustainable.”

While agreeing that VAT, or a similar form of taxation, needed to be imposed on the Bahamian economy’s services sector, Mr Wilson said the Government needed to end the practice of civil service ‘double dipping’ where persons received a pension and salary at the same time.

A retail entrepreneur, who owns Quality Business Centre (QBC) and the Radioshack franchise, Mr Wilson said the Government must also reform its procurement processes - something the Christie administration has promised to do.

And he also questioned whether donors, supporters and campaign generals of the governing party would be prosecuted in the courts for non-payment of VAT.

Broadening the tax base is one area where Mr Wilson appears to be in agreement with the Government, as a key objective of VAT is to capture the services sector, which is estimated to account for 70 per cent of Bahamian economic activity and is relatively untaxed.

“I think some form of taxation is appropriate for the services sector,” Mr Wilson said. “I do think there is a need for a VAT on the services sector. They have had a tax holiday for their entire existence.”

Pointing out that the Bahamas “doesn’t produce anything”, Mr Wilson said the only ‘value-added’ to the chain was the mark-up retailers placed upon a product’s landed cost and taxation at the border.

And, seeking out further room for public spending cuts, he added of the civil service: “All those who are getting a pension as well as a salary, they need to move on.

“The other side of the coin is to look at the method by which government purchases its goods and services,” Mr Wilson said.

“Civil servants own companies that supply the Government with products and services, and generals and supporters of MPs get first option on contracts. The only thing we as taxpayers get is the mandatory payment of taxes.”

The DNA chairman also suggested that the generals, supporters and associates “of the governing party will be exempt” from prosecution for VAT-related offences.